Correlation Between Broadcom and HP

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

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

Diversification Opportunities for Broadcom and HP

-0.45

Correlation Coefficient

Broadcom  HP

Very good diversification

The 3 months correlation between Broadcom and HP is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Broadcom and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc and Broadcom 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 Broadcom are associated (or correlated) with HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Broadcom i.e., Broadcom and HP go up and down completely randomly.

Pair Corralation between Broadcom and HP

Given the investment horizon of 90 days Broadcom is expected to generate 0.95 times more return on investment than HP. However, Broadcom is 1.05 times less risky than HP. It trades about 0.24 of its potential returns per unit of risk. HP Inc is currently generating about -0.08 per unit of risk. If you would invest  23,187  in Broadcom on May 13, 2025 and sell it today you would earn a total of  7,203  from holding Broadcom or generate 31.06% return on investment over 90 days.

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

Broadcom  vs.  HP Inc

Broadcom

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Broadcom are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Broadcom displayed solid returns over the last few months and may actually be approaching a breakup point.

HP Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Broadcom and HP

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

The idea behind Broadcom and HP Inc 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.