Correlation Between Xcel Brands and H M

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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

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Xcel and HNNMY is 0.39. 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 1.87 times more return on investment than H M. However, Xcel Brands is 1.87 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 0.0 per unit of risk. If you would invest  74.00  in Xcel Brands on August 2, 2024 and sell it today you would earn a total of  5.00  from holding Xcel Brands or generate 6.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Xcel Brands  vs.  H M Hennes

 Performance 
       Timeline  
Xcel Brands 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Xcel Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Xcel Brands sustained solid returns over the last few months and may actually be approaching a breakup point.
H M Hennes 

Risk-Adjusted Performance

2 of 100

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

Xcel Brands and H M Volatility Contrast

   Predicted Return Density   
       Returns  

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.
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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