Correlation Between VF and H M

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

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

Diversification Opportunities for VF and H M

-0.2

Correlation Coefficient

VF  H M

Good diversification

The 3 months correlation between VF and HNNMY is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. 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 VF 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 VF Corporation 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 VF i.e., VF and H M go up and down completely randomly.

Pair Corralation between VF and H M

Considering the 90-day investment horizon VF Corporation is expected to under-perform the H M. In addition to that, VF is 1.8 times more volatile than H M Hennes. It trades about -0.14 of its total potential returns per unit of risk. H M Hennes is currently generating about 0.0 per unit of volatility. If you would invest  266.00  in H M Hennes on December 19, 2024 and sell it today you would lose (2.00) from holding H M Hennes or give up 0.75% of portfolio value over 90 days.

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

VF Corp.  vs.  H M Hennes

VF Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days VF Corporation 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 technical and fundamental 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.

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. In spite of fairly strong primary indicators, H M is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VF and H M

The main advantage of trading using opposite VF and H M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VF 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 VF Corporation 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..