Correlation Between Under Armour and H M

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

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

Diversification Opportunities for Under Armour and H M

-0.69

Correlation Coefficient

Under Armour  H M

Excellent diversification

The 3 months correlation between Under and HNNMY is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C 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 Under Armour 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 Under Armour C 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 Under Armour i.e., Under Armour and H M go up and down completely randomly.

Pair Corralation between Under Armour and H M

Allowing for the 90-day total investment horizon Under Armour C is expected to under-perform the H M. But the stock apears to be less risky and, when comparing its historical volatility, Under Armour C is 2.86 times less risky than H M. The stock trades about -0.11 of its potential returns per unit of risk. The H M Hennes is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  281.00  in H M Hennes on January 25, 2024 and sell it today you would earn a total of  42.00  from holding H M Hennes or generate 14.95% return on investment over 90 days.

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

Under Armour C  vs.  H M Hennes

Under Armour C

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Under Armour C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

H M Hennes

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in H M Hennes are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, H M may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Under Armour and H M

The main advantage of trading using opposite Under Armour and H M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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 Under Armour C 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 Transaction History module to view history of all your transactions and understand their impact on performance.