Correlation Between Hugo Boss and Commerce Bancshares

Can any of the company-specific risk be diversified away by investing in both Hugo Boss and Commerce Bancshares 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 Commerce Bancshares 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 Commerce Bancshares, you can compare the effects of market volatilities on Hugo Boss and Commerce Bancshares 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 Commerce Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hugo Boss and Commerce Bancshares.

Diversification Opportunities for Hugo Boss and Commerce Bancshares

-0.36

Correlation Coefficient

Hugo Boss  Commerce Bancshares

Very good diversification

The 3 months correlation between Hugo and Commerce is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hugo Boss AG and Commerce Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerce Bancshares 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 Commerce Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerce Bancshares has no effect on the direction of Hugo Boss i.e., Hugo Boss and Commerce Bancshares go up and down completely randomly.

Pair Corralation between Hugo Boss and Commerce Bancshares

Assuming the 90 days trading horizon Hugo Boss AG is expected to generate 1.88 times more return on investment than Commerce Bancshares. However, Hugo Boss is 1.88 times more volatile than Commerce Bancshares. It trades about 0.02 of its potential returns per unit of risk. Commerce Bancshares is currently generating about -0.01 per unit of risk. If you would invest  4,053  in Hugo Boss AG on September 19, 2024 and sell it today you would lose (7.00) from holding Hugo Boss AG or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hugo Boss AG  vs.  Commerce Bancshares

Hugo Boss AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hugo Boss AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hugo Boss may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Commerce Bancshares

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Bancshares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Commerce Bancshares reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hugo Boss and Commerce Bancshares

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

The idea behind Hugo Boss AG and Commerce Bancshares 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.