Correlation Between HP and NUSTAR

Can any of the company-specific risk be diversified away by investing in both HP and NUSTAR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HP and NUSTAR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HP Inc and NUSTAR LOGISTICS L, you can compare the effects of market volatilities on HP and NUSTAR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HP with a short position of NUSTAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and NUSTAR.

Diversification Opportunities for HP and NUSTAR

0.3

Correlation Coefficient

HP  NUSTAR

Weak diversification

The 3 months correlation between HP and NUSTAR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and NUSTAR LOGISTICS L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NUSTAR LOGISTICS L and HP is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HP Inc are associated (or correlated) with NUSTAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NUSTAR LOGISTICS L has no effect on the direction of HP i.e., HP and NUSTAR go up and down completely randomly.

Pair Corralation between HP and NUSTAR

Considering the 90-day investment horizon HP Inc is expected to under-perform the NUSTAR. In addition to that, HP is 9.61 times more volatile than NUSTAR LOGISTICS L. It trades about -0.14 of its total potential returns per unit of risk. NUSTAR LOGISTICS L is currently generating about -0.01 per unit of volatility. If you would invest  9,981  in NUSTAR LOGISTICS L on December 30, 2024 and sell it today you would lose (10.00) from holding NUSTAR LOGISTICS L or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

HP Inc  vs.  NUSTAR LOGISTICS L

HP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

NUSTAR LOGISTICS L

Risk-Adjusted Performance

Very Weak

Over the last 90 days NUSTAR LOGISTICS L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NUSTAR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HP and NUSTAR

The main advantage of trading using opposite HP and NUSTAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, NUSTAR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NUSTAR will offset losses from the drop in NUSTAR's long position.

The idea behind HP Inc and NUSTAR LOGISTICS L pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.