Correlation Between H M and Oxford Industries

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

Diversification Opportunities for H M and Oxford Industries

-0.48

Correlation Coefficient

H M  Oxford Industries

Very good diversification

The 3 months correlation between HMRZF and Oxford is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Oxford Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Industries 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 Oxford Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Industries has no effect on the direction of H M i.e., H M and Oxford Industries go up and down completely randomly.

Pair Corralation between H M and Oxford Industries

Assuming the 90 days horizon H M Hennes is expected to generate 0.66 times more return on investment than Oxford Industries. However, H M Hennes is 1.51 times less risky than Oxford Industries. It trades about -0.01 of its potential returns per unit of risk. Oxford Industries is currently generating about -0.16 per unit of risk. If you would invest  1,418  in H M Hennes on December 19, 2024 and sell it today you would lose (34.00) from holding H M Hennes or give up 2.4% of portfolio value over 90 days.

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

H M Hennes  vs.  Oxford Industries

H M Hennes

Risk-Adjusted Performance

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H M is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Oxford Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oxford Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with H M and Oxford Industries

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

The idea behind H M Hennes and Oxford Industries 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.