Correlation Between HP and International Business

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both HP and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and International Business Machines, you can compare the effects of market volatilities on HP and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and International Business.

Diversification Opportunities for HP and International Business

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between HP and International is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of HP i.e., HP and International Business go up and down completely randomly.

Pair Corralation between HP and International Business

Considering the 90-day investment horizon HP Inc is expected to generate 1.11 times more return on investment than International Business. However, HP is 1.11 times more volatile than International Business Machines. It trades about 0.19 of its potential returns per unit of risk. International Business Machines is currently generating about -0.17 per unit of risk. If you would invest  3,140  in HP Inc on May 10, 2022 and sell it today you would earn a total of  211.00  from holding HP Inc or generate 6.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

HP Inc  vs.  International Business Machine

 Performance (%) 
       Timeline  
HP Inc 
HP Performance
0 of 100
Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

HP Price Channel

International Business 
International Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady fundamental drivers, International Business is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

International Price Channel

HP and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and International Business

The main advantage of trading using opposite HP and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
The idea behind HP Inc and International Business Machines 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.
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

Other Complementary Tools

Fundamental Analysis
View fundamental data based on most recent published financial statements
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go