Correlation Between HP and American Tower

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

Diversification Opportunities for HP and American Tower

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between HP and American is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and American Tower Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower Corp 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 American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower Corp has no effect on the direction of HP i.e., HP and American Tower go up and down completely randomly.

Pair Corralation between HP and American Tower

Considering the 90-day investment horizon HP Inc is expected to generate 1.39 times more return on investment than American Tower. However, HP is 1.39 times more volatile than American Tower Corp. It trades about 0.01 of its potential returns per unit of risk. American Tower Corp is currently generating about -0.02 per unit of risk. If you would invest  2,855  in HP Inc on September 8, 2022 and sell it today you would lose (72.00)  from holding HP Inc or give up 2.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

HP Inc  vs.  American Tower Corp

 Performance (%) 
       Timeline  
HP Inc 
HP Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, HP is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the insiders.

HP Price Channel

American Tower Corp 
American Performance
0 of 100
Over the last 90 days American Tower Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2023. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

American Price Channel

HP and American Tower Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and American Tower

The main advantage of trading using opposite HP and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, American Tower 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 American Tower will offset losses from the drop in American Tower's long position.
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The idea behind HP Inc and American Tower 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.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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