Correlation Between Hewlett Packard and Vishay Intertechnology

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

Diversification Opportunities for Hewlett Packard and Vishay Intertechnology

-0.4

Correlation Coefficient

Hewlett Packard  Vishay Intertechnology

Very good diversification

The 3 months correlation between Hewlett and Vishay is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Hewlett Packard i.e., Hewlett Packard and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Hewlett Packard and Vishay Intertechnology

Considering the 90-day investment horizon Hewlett Packard Enterprise is expected to generate 1.07 times more return on investment than Vishay Intertechnology. However, Hewlett Packard is 1.07 times more volatile than Vishay Intertechnology. It trades about 0.09 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about 0.03 per unit of risk. If you would invest  1,864  in Hewlett Packard Enterprise on September 4, 2024 and sell it today you would earn a total of  261.00  from holding Hewlett Packard Enterprise or generate 14.0% return on investment over 90 days.

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

Hewlett Packard Enterprise  vs.  Vishay Intertechnology

Hewlett Packard Ente

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 7 (%) 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.

Vishay Intertechnology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hewlett Packard and Vishay Intertechnology

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

The idea behind Hewlett Packard Enterprise and Vishay Intertechnology 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.