Correlation Between Coty and Seaport Entertainment
Can any of the company-specific risk be diversified away by investing in both Coty and Seaport Entertainment 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 Coty and Seaport Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coty Inc and Seaport Entertainment Group, you can compare the effects of market volatilities on Coty and Seaport Entertainment 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 Coty with a short position of Seaport Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Seaport Entertainment.
Diversification Opportunities for Coty and Seaport Entertainment
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coty and Seaport is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Seaport Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaport Entertainment and Coty 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 Coty Inc are associated (or correlated) with Seaport Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaport Entertainment has no effect on the direction of Coty i.e., Coty and Seaport Entertainment go up and down completely randomly.
Pair Corralation between Coty and Seaport Entertainment
Given the investment horizon of 90 days Coty Inc is expected to under-perform the Seaport Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Coty Inc is 2.35 times less risky than Seaport Entertainment. The stock trades about 0.0 of its potential returns per unit of risk. The Seaport Entertainment Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,991 in Seaport Entertainment Group on September 15, 2024 and sell it today you would lose (176.00) from holding Seaport Entertainment Group or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 19.8% |
| Values | Daily Returns |
Coty Inc vs. Seaport Entertainment Group
Performance |
| Timeline |
| Coty Inc |
| Seaport Entertainment |
Coty and Seaport Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coty and Seaport Entertainment
The main advantage of trading using opposite Coty and Seaport Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty position performs unexpectedly, Seaport Entertainment 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 Seaport Entertainment will offset losses from the drop in Seaport Entertainment's long position.The idea behind Coty Inc and Seaport Entertainment 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.| Seaport Entertainment vs. Lincoln Electric Holdings | Seaport Entertainment vs. European Wax Center | Seaport Entertainment vs. Beauty Health Co | Seaport Entertainment vs. Playstudios |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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