Correlation Between Hewlett Packard and Foxx Development

Can any of the company-specific risk be diversified away by investing in both Hewlett Packard and Foxx Development 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 Foxx Development 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 Foxx Development Holdings, you can compare the effects of market volatilities on Hewlett Packard and Foxx Development 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 Foxx Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hewlett Packard and Foxx Development.

Diversification Opportunities for Hewlett Packard and Foxx Development

-0.69

Correlation Coefficient

Hewlett Packard  Foxx Development

Excellent diversification

The 3 months correlation between Hewlett and Foxx is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and Foxx Development Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxx Development Holdings 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 Foxx Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxx Development Holdings has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and Foxx Development go up and down completely randomly.

Pair Corralation between Hewlett Packard and Foxx Development

Assuming the 90 days trading horizon Hewlett Packard Enterprise is expected to generate 0.19 times more return on investment than Foxx Development. However, Hewlett Packard Enterprise is 5.32 times less risky than Foxx Development. It trades about 0.1 of its potential returns per unit of risk. Foxx Development Holdings is currently generating about -0.05 per unit of risk. If you would invest  5,559  in Hewlett Packard Enterprise on September 17, 2024 and sell it today you would earn a total of  718.00  from holding Hewlett Packard Enterprise or generate 12.92% return on investment over 90 days.

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

Hewlett Packard Enterprise  vs.  Foxx Development Holdings

Hewlett Packard Ente

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Hewlett Packard exhibited solid returns over the last few months and may actually be approaching a breakup point.

Foxx Development Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxx Development Holdings 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hewlett Packard and Foxx Development

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

The idea behind Hewlett Packard Enterprise and Foxx Development Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.