Correlation Between Solo Brands and Ermenegildo Zegna
Can any of the company-specific risk be diversified away by investing in both Solo Brands and Ermenegildo Zegna 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 Solo Brands and Ermenegildo Zegna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solo Brands and Ermenegildo Zegna NV, you can compare the effects of market volatilities on Solo Brands and Ermenegildo Zegna 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 Solo Brands with a short position of Ermenegildo Zegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solo Brands and Ermenegildo Zegna.
Diversification Opportunities for Solo Brands and Ermenegildo Zegna
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solo and Ermenegildo is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Solo Brands and Ermenegildo Zegna NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ermenegildo Zegna and Solo Brands 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 Solo Brands are associated (or correlated) with Ermenegildo Zegna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ermenegildo Zegna has no effect on the direction of Solo Brands i.e., Solo Brands and Ermenegildo Zegna go up and down completely randomly.
Pair Corralation between Solo Brands and Ermenegildo Zegna
Considering the 90-day investment horizon Solo Brands is expected to under-perform the Ermenegildo Zegna. In addition to that, Solo Brands is 1.13 times more volatile than Ermenegildo Zegna NV. It trades about -0.17 of its total potential returns per unit of risk. Ermenegildo Zegna NV is currently generating about 0.05 per unit of volatility. If you would invest 851.00 in Ermenegildo Zegna NV on November 23, 2024 and sell it today you would earn a total of 36.00 from holding Ermenegildo Zegna NV or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solo Brands vs. Ermenegildo Zegna NV
Performance |
| Timeline |
| Solo Brands |
| Ermenegildo Zegna |
Solo Brands and Ermenegildo Zegna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solo Brands and Ermenegildo Zegna
The main advantage of trading using opposite Solo Brands and Ermenegildo Zegna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solo Brands position performs unexpectedly, Ermenegildo Zegna 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 Ermenegildo Zegna will offset losses from the drop in Ermenegildo Zegna's long position.| Solo Brands vs. Qurate Retail Series | ||
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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