Correlation Between Houston Natural and Pitney Bowes

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

By analyzing existing cross correlation between Houston Natural Resources and Pitney Bowes, you can compare the effects of market volatilities on Houston Natural and Pitney Bowes 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 Houston Natural with a short position of Pitney Bowes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Houston Natural and Pitney Bowes.

Diversification Opportunities for Houston Natural and Pitney Bowes

-0.04

Correlation Coefficient

Houston Natural  Pitney Bowes

Good diversification

The 3 months correlation between Houston and Pitney is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Houston Natural Resources and Pitney Bowes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pitney Bowes and Houston Natural 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 Houston Natural Resources are associated (or correlated) with Pitney Bowes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pitney Bowes has no effect on the direction of Houston Natural i.e., Houston Natural and Pitney Bowes go up and down completely randomly.

Pair Corralation between Houston Natural and Pitney Bowes

Given the investment horizon of 90 days Houston Natural is expected to generate 1.76 times less return on investment than Pitney Bowes. In addition to that, Houston Natural is 3.4 times more volatile than Pitney Bowes. It trades about 0.01 of its total potential returns per unit of risk. Pitney Bowes is currently generating about 0.03 per unit of volatility. If you would invest  410.00  in Pitney Bowes on February 3, 2024 and sell it today you would earn a total of  115.00  from holding Pitney Bowes or generate 28.05% return on investment over 90 days.

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

Houston Natural Resources  vs.  Pitney Bowes

Houston Natural Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Houston Natural Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Houston Natural exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pitney Bowes

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pitney Bowes are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Pitney Bowes demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Houston Natural and Pitney Bowes

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

The idea behind Houston Natural Resources and Pitney Bowes 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.