Correlation Between Burberry Group and Tapestry
Can any of the company-specific risk be diversified away by investing in both Burberry Group and Tapestry 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 Tapestry 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 Tapestry, you can compare the effects of market volatilities on Burberry Group and Tapestry 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 Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burberry Group and Tapestry.
Diversification Opportunities for Burberry Group and Tapestry
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Burberry and Tapestry is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Burberry Group Plc and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry 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 Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of Burberry Group i.e., Burberry Group and Tapestry go up and down completely randomly.
Pair Corralation between Burberry Group and Tapestry
Assuming the 90 days horizon Burberry Group is expected to generate 1.23 times less return on investment than Tapestry. In addition to that, Burberry Group is 1.46 times more volatile than Tapestry. It trades about 0.13 of its total potential returns per unit of risk. Tapestry is currently generating about 0.23 per unit of volatility. If you would invest 4,122 in Tapestry on August 31, 2024 and sell it today you would earn a total of 1,970 from holding Tapestry or generate 47.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burberry Group Plc vs. Tapestry
Performance |
| Timeline |
| Burberry Group Plc |
| Tapestry |
Burberry Group and Tapestry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burberry Group and Tapestry
The main advantage of trading using opposite Burberry Group and Tapestry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burberry Group position performs unexpectedly, Tapestry 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 Tapestry will offset losses from the drop in Tapestry'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 |
| Tapestry vs. Signet Jewelers | Tapestry vs. Movado Group | Tapestry vs. Lanvin Group Holdings | Tapestry vs. TheRealReal |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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