Correlation Between Xcel Brands and H M

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

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

Diversification Opportunities for Xcel Brands and H M

0.56

Correlation Coefficient

Xcel Brands  H M

Very weak diversification

The 3 months correlation between Xcel and HMRZF is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Brands 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 Xcel Brands 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 Xcel Brands 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 Xcel Brands i.e., Xcel Brands and H M go up and down completely randomly.

Pair Corralation between Xcel Brands and H M

Given the investment horizon of 90 days Xcel Brands is expected to generate 8.29 times more return on investment than H M. However, Xcel Brands is 8.29 times more volatile than H M Hennes. It trades about -0.03 of its potential returns per unit of risk. H M Hennes is currently generating about -0.28 per unit of risk. If you would invest  66.00  in Xcel Brands on October 9, 2024 and sell it today you would lose (15.00) from holding Xcel Brands or give up 22.73% of portfolio value over 90 days.

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

Xcel Brands  vs.  H M Hennes

Xcel Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xcel Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

H M Hennes

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Xcel Brands and H M

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

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.