Correlation Between URBAN OUTFITTERS and Hugo Boss

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

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

Diversification Opportunities for URBAN OUTFITTERS and Hugo Boss

0.53

Correlation Coefficient

URBAN OUTFITTERS  Hugo Boss

Very weak diversification

The 3 months correlation between URBAN and Hugo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 URBAN OUTFITTERS i.e., URBAN OUTFITTERS and Hugo Boss go up and down completely randomly.

Pair Corralation between URBAN OUTFITTERS and Hugo Boss

Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 1.55 times more return on investment than Hugo Boss. However, URBAN OUTFITTERS is 1.55 times more volatile than Hugo Boss AG. It trades about 0.05 of its potential returns per unit of risk. Hugo Boss AG is currently generating about 0.0 per unit of risk. If you would invest  2,159  in URBAN OUTFITTERS on February 3, 2024 and sell it today you would earn a total of  1,501  from holding URBAN OUTFITTERS or generate 69.52% return on investment over 90 days.

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

URBAN OUTFITTERS  vs.  Hugo Boss AG

URBAN OUTFITTERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days URBAN OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, URBAN OUTFITTERS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Hugo Boss AG

Risk-Adjusted Performance

0 of 100

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 very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with URBAN OUTFITTERS and Hugo Boss

The main advantage of trading using opposite URBAN OUTFITTERS and Hugo Boss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URBAN OUTFITTERS 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 URBAN OUTFITTERS 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.