Correlation Between Burberry Group and Kering SA
Can any of the company-specific risk be diversified away by investing in both Burberry Group and Kering SA 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 Kering SA 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 Kering SA, you can compare the effects of market volatilities on Burberry Group and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burberry Group and Kering SA.
Diversification Opportunities for Burberry Group and Kering SA
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Burberry and Kering is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Burberry Group Plc and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Burberry Group i.e., Burberry Group and Kering SA go up and down completely randomly.
Pair Corralation between Burberry Group and Kering SA
Assuming the 90 days horizon Burberry Group Plc is expected to generate 1.17 times more return on investment than Kering SA. However, Burberry Group is 1.17 times more volatile than Kering SA. It trades about -0.05 of its potential returns per unit of risk. Kering SA is currently generating about -0.07 per unit of risk. If you would invest 2,383 in Burberry Group Plc on August 27, 2024 and sell it today you would lose (1,270) from holding Burberry Group Plc or give up 53.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burberry Group Plc vs. Kering SA
Performance |
| Timeline |
| Burberry Group Plc |
| Kering SA |
Burberry Group and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burberry Group and Kering SA
The main advantage of trading using opposite Burberry Group and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burberry Group position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.| Burberry Group vs. Compagnie Financiere Richemont | Burberry Group vs. Hermes International SA | Burberry Group vs. Prada Spa PK | Burberry Group vs. Swatch Group AG |
| Kering SA vs. Burberry Group Plc | Kering SA vs. Swatch Group AG | Kering SA vs. Prada Spa PK | Kering SA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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