Correlation Between Lands End and Hibbett Sports

Can any of the company-specific risk be diversified away by investing in both Lands End and Hibbett Sports 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 Lands End and Hibbett Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lands End and Hibbett Sports, you can compare the effects of market volatilities on Lands End and Hibbett Sports 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 Lands End with a short position of Hibbett Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lands End and Hibbett Sports.

Diversification Opportunities for Lands End and Hibbett Sports

0.37

Correlation Coefficient

Lands End  Hibbett Sports

Weak diversification

The 3 months correlation between Lands and Hibbett is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and Hibbett Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hibbett Sports and Lands End 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 Lands End are associated (or correlated) with Hibbett Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hibbett Sports has no effect on the direction of Lands End i.e., Lands End and Hibbett Sports go up and down completely randomly.

Pair Corralation between Lands End and Hibbett Sports

Allowing for the 90-day total investment horizon Lands End is expected to generate 1.35 times less return on investment than Hibbett Sports. But when comparing it to its historical volatility, Lands End is 1.07 times less risky than Hibbett Sports. It trades about 0.16 of its potential returns per unit of risk. Hibbett Sports is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  7,246  in Hibbett Sports on February 2, 2024 and sell it today you would earn a total of  1,368  from holding Hibbett Sports or generate 18.88% return on investment over 90 days.

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

Lands End  vs.  Hibbett Sports

Lands End

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Lands End exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hibbett Sports

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hibbett Sports are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Hibbett Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lands End and Hibbett Sports

The main advantage of trading using opposite Lands End and Hibbett Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End position performs unexpectedly, Hibbett Sports 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 Hibbett Sports will offset losses from the drop in Hibbett Sports' long position.

The idea behind Lands End and Hibbett Sports 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.