Correlation Between Burberry Group and Swatch Group
Can any of the company-specific risk be diversified away by investing in both Burberry Group and Swatch Group 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 Burberry Group and Swatch Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burberry Group plc and Swatch Group AG, you can compare the effects of market volatilities on Burberry Group and Swatch Group 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 Burberry Group with a short position of Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burberry Group and Swatch Group.
Diversification Opportunities for Burberry Group and Swatch Group
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Burberry and Swatch is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Burberry Group plc and Swatch Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group AG and Burberry Group 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 Burberry Group plc are associated (or correlated) with Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group AG has no effect on the direction of Burberry Group i.e., Burberry Group and Swatch Group go up and down completely randomly.
Pair Corralation between Burberry Group and Swatch Group
Assuming the 90 days horizon Burberry Group plc is expected to under-perform the Swatch Group. In addition to that, Burberry Group is 1.99 times more volatile than Swatch Group AG. It trades about -0.04 of its total potential returns per unit of risk. Swatch Group AG is currently generating about -0.07 per unit of volatility. If you would invest 1,279 in Swatch Group AG on August 27, 2024 and sell it today you would lose (392.00) from holding Swatch Group AG or give up 30.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.85% |
| Values | Daily Returns |
Burberry Group plc vs. Swatch Group AG
Performance |
| Timeline |
| Burberry Group plc |
| Swatch Group AG |
Burberry Group and Swatch Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burberry Group and Swatch Group
The main advantage of trading using opposite Burberry Group and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burberry Group position performs unexpectedly, Swatch Group 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 Swatch Group will offset losses from the drop in Swatch Group's long position.| Burberry Group vs. Kering SA | Burberry Group vs. Compagnie Financiere Richemont | Burberry Group vs. Swatch Group AG | Burberry Group vs. Prada Spa PK |
| Swatch Group vs. Kering SA | Swatch Group vs. Burberry Group Plc | Swatch Group vs. Prada Spa PK | Swatch Group vs. Compagnie Financire Richemont |
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 CEOs Directory module to screen CEOs from public companies around the world.
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