Correlation Between Hewlett Packard and Clearfield

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

Diversification Opportunities for Hewlett Packard and Clearfield

-0.69

Correlation Coefficient

Hewlett Packard  Clearfield

Excellent diversification

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

Pair Corralation between Hewlett Packard and Clearfield

Considering the 90-day investment horizon Hewlett Packard Enterprise is expected to generate 0.95 times more return on investment than Clearfield. However, Hewlett Packard Enterprise is 1.05 times less risky than Clearfield. It trades about 0.17 of its potential returns per unit of risk. Clearfield is currently generating about -0.1 per unit of risk. If you would invest  1,703  in Hewlett Packard Enterprise on September 13, 2024 and sell it today you would earn a total of  489.00  from holding Hewlett Packard Enterprise or generate 28.71% 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.  Clearfield

Hewlett Packard Ente

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Hewlett Packard exhibited solid returns over the last few months and may actually be approaching a breakup point.

Clearfield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearfield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hewlett Packard and Clearfield

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

The idea behind Hewlett Packard Enterprise and Clearfield 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.