Correlation Between HP and VERIZON

Can any of the company-specific risk be diversified away by investing in both HP and VERIZON 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 VERIZON into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HP Inc and VERIZON GLOBAL FDG, you can compare the effects of market volatilities on HP and VERIZON 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 VERIZON. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and VERIZON.

Diversification Opportunities for HP and VERIZON

-0.33

Correlation Coefficient

HP  VERIZON

Very good diversification

The 3 months correlation between HP and VERIZON is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and VERIZON GLOBAL FDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VERIZON GLOBAL FDG 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 VERIZON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VERIZON GLOBAL FDG has no effect on the direction of HP i.e., HP and VERIZON go up and down completely randomly.

Pair Corralation between HP and VERIZON

Considering the 90-day investment horizon HP Inc is expected to under-perform the VERIZON. In addition to that, HP is 1.49 times more volatile than VERIZON GLOBAL FDG. It trades about -0.14 of its total potential returns per unit of risk. VERIZON GLOBAL FDG is currently generating about 0.02 per unit of volatility. If you would invest  10,336  in VERIZON GLOBAL FDG on December 30, 2024 and sell it today you would earn a total of  114.00  from holding VERIZON GLOBAL FDG or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

HP Inc  vs.  VERIZON GLOBAL FDG

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.

VERIZON GLOBAL FDG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VERIZON GLOBAL FDG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, VERIZON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HP and VERIZON

The main advantage of trading using opposite HP and VERIZON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, VERIZON 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 VERIZON will offset losses from the drop in VERIZON's long position.

The idea behind HP Inc and VERIZON GLOBAL FDG 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.