Correlation Between H M and Xcel Brands
Can any of the company-specific risk be diversified away by investing in both H M and Xcel Brands 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 H M and Xcel Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H M Hennes and Xcel Brands, you can compare the effects of market volatilities on H M and Xcel Brands 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 H M with a short position of Xcel Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Xcel Brands.
Diversification Opportunities for H M and Xcel Brands
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HMRZF and Xcel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Brands and H M 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 H M Hennes are associated (or correlated) with Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of H M i.e., H M and Xcel Brands go up and down completely randomly.
Pair Corralation between H M and Xcel Brands
Assuming the 90 days horizon H M Hennes is expected to generate 0.34 times more return on investment than Xcel Brands. However, H M Hennes is 2.95 times less risky than Xcel Brands. It trades about 0.1 of its potential returns per unit of risk. Xcel Brands is currently generating about -0.26 per unit of risk. If you would invest 1,319 in H M Hennes on November 4, 2024 and sell it today you would earn a total of 30.00 from holding H M Hennes or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H M Hennes vs. Xcel Brands
Performance |
| Timeline |
| H M Hennes |
| Xcel Brands |
H M and Xcel Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H M and Xcel Brands
The main advantage of trading using opposite H M and Xcel Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M position performs unexpectedly, Xcel Brands 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 Xcel Brands will offset losses from the drop in Xcel Brands' long position.The idea behind H M Hennes and Xcel Brands 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.| Xcel Brands vs. H M Hennes | Xcel Brands vs. Under Armour C | Xcel Brands vs. H M Hennes | Xcel Brands vs. Oxford Industries |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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