Correlation Between Ralph Lauren and Hugo Boss

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

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

Diversification Opportunities for Ralph Lauren and Hugo Boss

0.8

Correlation Coefficient

Ralph Lauren  Hugo Boss

Very poor diversification

The 3 months correlation between Ralph and Hugo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren and Hugo Boss AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugo Boss AG and Ralph Lauren 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 Ralph Lauren are associated (or correlated) with Hugo Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugo Boss AG has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Hugo Boss go up and down completely randomly.

Pair Corralation between Ralph Lauren and Hugo Boss

Assuming the 90 days horizon Ralph Lauren is expected to generate 1.52 times more return on investment than Hugo Boss. However, Ralph Lauren is 1.52 times more volatile than Hugo Boss AG. It trades about -0.03 of its potential returns per unit of risk. Hugo Boss AG is currently generating about -0.14 per unit of risk. If you would invest  21,690  in Ralph Lauren on December 30, 2024 and sell it today you would lose (2,284) from holding Ralph Lauren or give up 10.53% of portfolio value over 90 days.

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

Ralph Lauren  vs.  Hugo Boss AG

Ralph Lauren

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ralph Lauren has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 fragile 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.

Pair Trading with Ralph Lauren and Hugo Boss

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

The idea behind Ralph Lauren and Hugo Boss AG 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.