Correlation Between Hour Loop and Boohoo PLC
Can any of the company-specific risk be diversified away by investing in both Hour Loop and Boohoo PLC 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 Hour Loop and Boohoo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hour Loop and BoohooCom PLC ADR, you can compare the effects of market volatilities on Hour Loop and Boohoo PLC 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 Hour Loop with a short position of Boohoo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hour Loop and Boohoo PLC.
Diversification Opportunities for Hour Loop and Boohoo PLC
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hour and Boohoo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hour Loop and BoohooCom PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BoohooCom PLC ADR and Hour Loop 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 Hour Loop are associated (or correlated) with Boohoo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BoohooCom PLC ADR has no effect on the direction of Hour Loop i.e., Hour Loop and Boohoo PLC go up and down completely randomly.
Pair Corralation between Hour Loop and Boohoo PLC
Given the investment horizon of 90 days Hour Loop is expected to under-perform the Boohoo PLC. In addition to that, Hour Loop is 1.63 times more volatile than BoohooCom PLC ADR. It trades about -0.01 of its total potential returns per unit of risk. BoohooCom PLC ADR is currently generating about 0.01 per unit of volatility. If you would invest 823.00 in BoohooCom PLC ADR on August 29, 2024 and sell it today you would lose (55.00) from holding BoohooCom PLC ADR or give up 6.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hour Loop vs. BoohooCom PLC ADR
Performance |
| Timeline |
| Hour Loop |
| BoohooCom PLC ADR |
Hour Loop and Boohoo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hour Loop and Boohoo PLC
The main advantage of trading using opposite Hour Loop and Boohoo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hour Loop position performs unexpectedly, Boohoo PLC 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 Boohoo PLC will offset losses from the drop in Boohoo PLC's long position.The idea behind Hour Loop and BoohooCom PLC ADR 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.| Boohoo PLC vs. 1StdibsCom | Boohoo PLC vs. Natural Health Trend | Boohoo PLC vs. Hour Loop | Boohoo PLC vs. Liquidity 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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