Correlation Between CHRISTIAN DIOR and Herms International
Can any of the company-specific risk be diversified away by investing in both CHRISTIAN DIOR and Herms International 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 Herms International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHRISTIAN DIOR ADR14EO2 and Herms International Socit, you can compare the effects of market volatilities on CHRISTIAN DIOR and Herms International 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 Herms International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHRISTIAN DIOR and Herms International.
Diversification Opportunities for CHRISTIAN DIOR and Herms International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHRISTIAN and Herms is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CHRISTIAN DIOR ADR14EO2 and Herms International Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herms International Socit 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 ADR14EO2 are associated (or correlated) with Herms International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herms International Socit has no effect on the direction of CHRISTIAN DIOR i.e., CHRISTIAN DIOR and Herms International go up and down completely randomly.
Pair Corralation between CHRISTIAN DIOR and Herms International
Assuming the 90 days trading horizon CHRISTIAN DIOR ADR14EO2 is expected to under-perform the Herms International. But the stock apears to be less risky and, when comparing its historical volatility, CHRISTIAN DIOR ADR14EO2 is 1.05 times less risky than Herms International. The stock trades about -0.04 of its potential returns per unit of risk. The Herms International Socit is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 214,400 in Herms International Socit on September 26, 2024 and sell it today you would earn a total of 16,900 from holding Herms International Socit or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHRISTIAN DIOR ADR14EO2 vs. Herms International Socit
Performance |
| Timeline |
| CHRISTIAN DIOR ADR14EO2 |
| Herms International Socit |
CHRISTIAN DIOR and Herms International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHRISTIAN DIOR and Herms International
The main advantage of trading using opposite CHRISTIAN DIOR and Herms International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHRISTIAN DIOR position performs unexpectedly, Herms International 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 Herms International will offset losses from the drop in Herms International's long position.| CHRISTIAN DIOR vs. LVMH Mot Hennessy | CHRISTIAN DIOR vs. Herms International Socit | CHRISTIAN DIOR vs. Christian Dior SE | CHRISTIAN DIOR vs. The Swatch Group |
| Herms International vs. LVMH Mot Hennessy | Herms International vs. CHRISTIAN DIOR ADR14EO2 | Herms International vs. Christian Dior SE | Herms International vs. The Swatch Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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