Correlation Between Hugo Boss and Select Energy

Can any of the company-specific risk be diversified away by investing in both Hugo Boss and Select Energy 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 Hugo Boss and Select Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hugo Boss AG and Select Energy Services, you can compare the effects of market volatilities on Hugo Boss and Select Energy 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 Hugo Boss with a short position of Select Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hugo Boss and Select Energy.

Diversification Opportunities for Hugo Boss and Select Energy

0.68

Correlation Coefficient

Hugo Boss  Select Energy

Poor diversification

The 3 months correlation between Hugo and Select is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hugo Boss AG and Select Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Energy Services and Hugo Boss 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 Hugo Boss AG are associated (or correlated) with Select Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Energy Services has no effect on the direction of Hugo Boss i.e., Hugo Boss and Select Energy go up and down completely randomly.

Pair Corralation between Hugo Boss and Select Energy

Assuming the 90 days trading horizon Hugo Boss AG is expected to under-perform the Select Energy. But the stock apears to be less risky and, when comparing its historical volatility, Hugo Boss AG is 1.61 times less risky than Select Energy. The stock trades about -0.12 of its potential returns per unit of risk. The Select Energy Services is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,197  in Select Energy Services on December 28, 2024 and sell it today you would lose (192.00) from holding Select Energy Services or give up 16.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Hugo Boss AG  vs.  Select Energy Services

Hugo Boss AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hugo Boss AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Select Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hugo Boss and Select Energy

The main advantage of trading using opposite Hugo Boss and Select Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hugo Boss position performs unexpectedly, Select Energy 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 Select Energy will offset losses from the drop in Select Energy's long position.

The idea behind Hugo Boss AG and Select Energy Services 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.