Correlation Between Christian Dior and Prada SpA
Can any of the company-specific risk be diversified away by investing in both Christian Dior and Prada SpA 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 Christian Dior and Prada SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Christian Dior SE and Prada SpA, you can compare the effects of market volatilities on Christian Dior and Prada SpA 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 Christian Dior with a short position of Prada SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Christian Dior and Prada SpA.
Diversification Opportunities for Christian Dior and Prada SpA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Christian and Prada is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and Prada SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prada SpA and Christian Dior 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 Christian Dior SE are associated (or correlated) with Prada SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prada SpA has no effect on the direction of Christian Dior i.e., Christian Dior and Prada SpA go up and down completely randomly.
Pair Corralation between Christian Dior and Prada SpA
Assuming the 90 days horizon Christian Dior SE is expected to under-perform the Prada SpA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Christian Dior SE is 1.42 times less risky than Prada SpA. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Prada SpA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 783.00 in Prada SpA on November 27, 2024 and sell it today you would earn a total of 88.00 from holding Prada SpA or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Christian Dior SE vs. Prada SpA
Performance |
| Timeline |
| Christian Dior SE |
| Prada SpA |
Christian Dior and Prada SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Christian Dior and Prada SpA
The main advantage of trading using opposite Christian Dior and Prada SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Christian Dior position performs unexpectedly, Prada SpA 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 Prada SpA will offset losses from the drop in Prada SpA's long position.| Christian Dior vs. Kering SA | Christian Dior vs. Compagnie Financire Richemont | Christian Dior vs. Prada SpA | Christian Dior vs. Compagnie Financiere Richemont |
| Prada SpA vs. Compagnie Financiere Richemont | Prada SpA vs. Kering SA | Prada SpA vs. Burberry Group Plc | Prada SpA vs. Swatch Group AG |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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