Correlation Between Solo Brands and Hour Loop
Can any of the company-specific risk be diversified away by investing in both Solo Brands and Hour Loop 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 Solo Brands and Hour Loop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solo Brands and Hour Loop, you can compare the effects of market volatilities on Solo Brands and Hour Loop 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 Solo Brands with a short position of Hour Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solo Brands and Hour Loop.
Diversification Opportunities for Solo Brands and Hour Loop
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Solo and Hour is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and Hour Loop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hour Loop and Solo Brands 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 Solo Brands are associated (or correlated) with Hour Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hour Loop has no effect on the direction of Solo Brands i.e., Solo Brands and Hour Loop go up and down completely randomly.
Pair Corralation between Solo Brands and Hour Loop
Considering the 90-day investment horizon Solo Brands is expected to under-perform the Hour Loop. But the stock apears to be less risky and, when comparing its historical volatility, Solo Brands is 2.18 times less risky than Hour Loop. The stock trades about -0.12 of its potential returns per unit of risk. The Hour Loop is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 102.00 in Hour Loop on January 11, 2025 and sell it today you would earn a total of 12.00 from holding Hour Loop or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solo Brands vs. Hour Loop
Performance |
| Timeline |
| Solo Brands |
| Hour Loop |
Solo Brands and Hour Loop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solo Brands and Hour Loop
The main advantage of trading using opposite Solo Brands and Hour Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands position performs unexpectedly, Hour Loop 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 Hour Loop will offset losses from the drop in Hour Loop's long position.| Solo Brands vs. Hour Loop | Solo Brands vs. 1StdibsCom | Solo Brands vs. Baozun Inc | Solo Brands vs. Vipshop Holdings Limited |
| Hour Loop vs. iPower Inc | Hour Loop vs. MOGU Inc | Hour Loop vs. Liquidity Services | Hour Loop vs. 1StdibsCom |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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