Correlation Between HP and Marathon Gold

Can any of the company-specific risk be diversified away by investing in both HP and Marathon Gold 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 Marathon Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HP Inc and Marathon Gold, you can compare the effects of market volatilities on HP and Marathon Gold 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 Marathon Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Marathon Gold.

Diversification Opportunities for HP and Marathon Gold

-0.38

Correlation Coefficient

HP  Marathon Gold

Very good diversification

The 3 months correlation between HP and Marathon is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Marathon Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Gold 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 Marathon Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Gold has no effect on the direction of HP i.e., HP and Marathon Gold go up and down completely randomly.

Pair Corralation between HP and Marathon Gold

Considering the 90-day investment horizon HP Inc is expected to generate 0.47 times more return on investment than Marathon Gold. However, HP Inc is 2.13 times less risky than Marathon Gold. It trades about 0.04 of its potential returns per unit of risk. Marathon Gold is currently generating about 0.01 per unit of risk. If you would invest  2,717  in HP Inc on September 3, 2024 and sell it today you would earn a total of  826.00  from holding HP Inc or generate 30.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.91%
Values	Daily Returns

HP Inc  vs.  Marathon Gold

HP Inc

Risk-Adjusted Performance

1 of 100

Weak

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. Even with relatively invariable basic indicators, HP is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Marathon Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marathon Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Marathon Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HP and Marathon Gold

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

The idea behind HP Inc and Marathon Gold 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.