Correlation Between MARKET VECTR and H M

Can any of the company-specific risk be diversified away by investing in both MARKET VECTR 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 MARKET VECTR and H M into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MARKET VECTR RETAIL and H M Hennes, you can compare the effects of market volatilities on MARKET VECTR 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 MARKET VECTR with a short position of H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of MARKET VECTR and H M.

Diversification Opportunities for MARKET VECTR and H M

0.86

Correlation Coefficient

MARKET VECTR  H M

Very poor diversification

The 3 months correlation between MARKET and HMSB is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL 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 MARKET VECTR 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 MARKET VECTR RETAIL 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 MARKET VECTR i.e., MARKET VECTR and H M go up and down completely randomly.

Pair Corralation between MARKET VECTR and H M

Assuming the 90 days trading horizon MARKET VECTR is expected to generate 1.2 times less return on investment than H M. But when comparing it to its historical volatility, MARKET VECTR RETAIL is 3.83 times less risky than H M. It trades about 0.21 of its potential returns per unit of risk. H M Hennes is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,155  in H M Hennes on October 8, 2024 and sell it today you would earn a total of  125.00  from holding H M Hennes or generate 10.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

MARKET VECTR RETAIL  vs.  H M Hennes

MARKET VECTR RETAIL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, MARKET VECTR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

H M Hennes

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in H M Hennes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, H M exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MARKET VECTR and H M

The main advantage of trading using opposite MARKET VECTR and H M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MARKET VECTR 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.

The idea behind MARKET VECTR RETAIL and H M Hennes 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 Transaction History module to view history of all your transactions and understand their impact on performance.