Correlation Between Hermes Intl and Lands End

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Can any of the company-specific risk be diversified away by investing in both Hermes Intl and Lands End 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 Hermes Intl and Lands End into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hermes Intl SA and Lands End, you can compare the effects of market volatilities on Hermes Intl and Lands End 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 Hermes Intl with a short position of Lands End. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes Intl and Lands End.

Diversification Opportunities for Hermes Intl and Lands End

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Hermes and Lands is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hermes Intl SA and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End and Hermes Intl 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 Hermes Intl SA are associated (or correlated) with Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of Hermes Intl i.e., Hermes Intl and Lands End go up and down completely randomly.

Pair Corralation between Hermes Intl and Lands End

Assuming the 90 days horizon Hermes Intl SA is expected to generate 0.69 times more return on investment than Lands End. However, Hermes Intl SA is 1.46 times less risky than Lands End. It trades about 0.22 of its potential returns per unit of risk. Lands End is currently generating about 0.11 per unit of risk. If you would invest  132,550  in Hermes Intl SA on August 28, 2022 and sell it today you would earn a total of  21,775  from holding Hermes Intl SA or generate 16.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Hermes Intl SA  vs.  Lands End

 Performance (%) 
       Timeline  
Hermes Intl SA 
Hermes Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hermes Intl SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Hermes Intl exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hermes Price Channel

Lands End 
Lands Performance
0 of 100
Over the last 90 days Lands End has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lands Price Channel

Hermes Intl and Lands End Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hermes Intl and Lands End

The main advantage of trading using opposite Hermes Intl and Lands End positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes Intl position performs unexpectedly, Lands End 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 Lands End will offset losses from the drop in Lands End's long position.
Hermes Intl vs. Hermes Intl SA
The idea behind Hermes Intl SA and Lands End 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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