Correlation Between Hewlett Packard and CalAmp Corp

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Can any of the company-specific risk be diversified away by investing in both Hewlett Packard and CalAmp Corp 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 Hewlett Packard and CalAmp Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hewlett Packard Enterprise and CalAmp Corp, you can compare the effects of market volatilities on Hewlett Packard and CalAmp Corp 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 Hewlett Packard with a short position of CalAmp Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and CalAmp Corp.

Diversification Opportunities for Hewlett Packard and CalAmp Corp

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Hewlett and CalAmp is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and CalAmp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CalAmp Corp and Hewlett Packard 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 Hewlett Packard Enterprise are associated (or correlated) with CalAmp Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CalAmp Corp has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and CalAmp Corp go up and down completely randomly.

Pair Corralation between Hewlett Packard and CalAmp Corp

Considering the 90-day investment horizon Hewlett Packard Enterprise is expected to generate 0.26 times more return on investment than CalAmp Corp. However, Hewlett Packard Enterprise is 3.78 times less risky than CalAmp Corp. It trades about -0.34 of its potential returns per unit of risk. CalAmp Corp is currently generating about -0.29 per unit of risk. If you would invest  1,337  in Hewlett Packard Enterprise on July 3, 2022 and sell it today you would lose (139.00)  from holding Hewlett Packard Enterprise or give up 10.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hewlett Packard Enterprise  vs.  CalAmp Corp

 Performance (%) 
       Timeline  
Hewlett Packard Ente 
Hewlett Performance
0 of 100
Over the last 90 days Hewlett Packard Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hewlett Packard is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hewlett Price Channel

CalAmp Corp 
CalAmp Performance
0 of 100
Over the last 90 days CalAmp Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, CalAmp Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

CalAmp Price Channel

Hewlett Packard and CalAmp Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hewlett Packard and CalAmp Corp

The main advantage of trading using opposite Hewlett Packard and CalAmp Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hewlett Packard position performs unexpectedly, CalAmp Corp 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 CalAmp Corp will offset losses from the drop in CalAmp Corp's long position.
Hewlett Packard vs. Amazon Inc
The idea behind Hewlett Packard Enterprise and CalAmp Corp 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.
CalAmp Corp vs. Amazon Inc
Check out your portfolio center. 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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