Correlation Between Xcel Brands and H M
Can any of the company-specific risk be diversified away by investing in both Xcel Brands and H M 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 Xcel Brands and H M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xcel Brands and H M Hennes, you can compare the effects of market volatilities on Xcel Brands and H M 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 Xcel Brands with a short position of H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xcel Brands and H M.
Diversification Opportunities for Xcel Brands and H M
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xcel and HMRZF is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Brands and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes and Xcel 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 Xcel Brands are associated (or correlated) with H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of Xcel Brands i.e., Xcel Brands and H M go up and down completely randomly.
Pair Corralation between Xcel Brands and H M
Given the investment horizon of 90 days Xcel Brands is expected to under-perform the H M. In addition to that, Xcel Brands is 3.0 times more volatile than H M Hennes. It trades about -0.22 of its total potential returns per unit of risk. H M Hennes is currently generating about 0.1 per unit of volatility. If you would invest 1,319 in H M Hennes on November 3, 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 |
Xcel Brands vs. H M Hennes
Performance |
| Timeline |
| Xcel Brands |
| H M Hennes |
Xcel Brands and H M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xcel Brands and H M
The main advantage of trading using opposite Xcel Brands and H M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xcel Brands position performs unexpectedly, H M 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 H M will offset losses from the drop in H M's long position.| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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