Correlation Between VF and H M

Specify exactly 2 symbols:
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

0.67
  Correlation Coefficient
 VF
 H M

Poor diversification

The 3 months correlation between VF and HMRZF is 0.67. 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. But the stock apears to be less risky and, when comparing its historical volatility, VF Corporation is 2.07 times less risky than H M. The stock trades about -0.08 of its potential returns per unit of risk. The H M Hennes is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,364  in H M Hennes on December 30, 2023 and sell it today you would earn a total of  320.00  from holding H M Hennes or generate 23.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

VF Corp.  vs.  H M Hennes

 Performance 
       Timeline  
VF Corporation 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 unsteady 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 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
H M Hennes 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 nearly stable basic indicators, H M is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

VF and H M Volatility Contrast

   Predicted Return Density   
       Returns  

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

Other Complementary Tools

Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Fundamental Analysis
View fundamental data based on most recent published financial statements
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk