Correlation Between Birks and Fossil
Can any of the company-specific risk be diversified away by investing in both Birks and Fossil 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 Birks and Fossil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and Fossil Group, you can compare the effects of market volatilities on Birks and Fossil 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 Birks with a short position of Fossil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and Fossil.
Diversification Opportunities for Birks and Fossil
Very good diversification
The 3 months correlation between Birks and Fossil is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group and Birks 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 Birks Group are associated (or correlated) with Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Birks i.e., Birks and Fossil go up and down completely randomly.
Pair Corralation between Birks and Fossil
Considering the 90-day investment horizon Birks Group is expected to under-perform the Fossil. But the stock apears to be less risky and, when comparing its historical volatility, Birks Group is 1.46 times less risky than Fossil. The stock trades about -0.12 of its potential returns per unit of risk. The Fossil Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Fossil Group on August 27, 2024 and sell it today you would earn a total of 11.00 from holding Fossil Group or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birks Group vs. Fossil Group
Performance |
| Timeline |
| Birks Group |
| Fossil Group |
Birks and Fossil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and Fossil
The main advantage of trading using opposite Birks and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks position performs unexpectedly, Fossil 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 Fossil will offset losses from the drop in Fossil's long position.The idea behind Birks Group and Fossil Group 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.| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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