Correlation Between H M and Big 5
Can any of the company-specific risk be diversified away by investing in both H M and Big 5 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 Big 5 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 Big 5 Sporting, you can compare the effects of market volatilities on H M and Big 5 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 Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Big 5.
Diversification Opportunities for H M and Big 5
Very good diversification
The 3 months correlation between HMSB and Big is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting 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 Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of H M i.e., H M and Big 5 go up and down completely randomly.
Pair Corralation between H M and Big 5
Assuming the 90 days trading horizon H M Hennes is expected to generate 1.29 times more return on investment than Big 5. However, H M is 1.29 times more volatile than Big 5 Sporting. It trades about 0.12 of its potential returns per unit of risk. Big 5 Sporting is currently generating about -0.11 per unit of risk. If you would invest 1,157 in H M Hennes on August 29, 2024 and sell it today you would earn a total of 157.00 from holding H M Hennes or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H M Hennes vs. Big 5 Sporting
Performance |
| Timeline |
| H M Hennes |
| Big 5 Sporting |
H M and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H M and Big 5
The main advantage of trading using opposite H M and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| H M vs. Clean Energy Fuels | H M vs. Fukuyama Transporting Co | H M vs. Gaztransport Technigaz SA | H M vs. Air Transport Services |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |