Correlation Between Fossil and Birks
Can any of the company-specific risk be diversified away by investing in both Fossil and Birks 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 Fossil and Birks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fossil Group and Birks Group, you can compare the effects of market volatilities on Fossil and Birks 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 Fossil with a short position of Birks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fossil and Birks.
Diversification Opportunities for Fossil and Birks
Pay attention - limited upside
The 3 months correlation between Fossil and Birks is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group and Birks Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birks Group and Fossil 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 Fossil Group are associated (or correlated) with Birks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birks Group has no effect on the direction of Fossil i.e., Fossil and Birks go up and down completely randomly.
Pair Corralation between Fossil and Birks
Given the investment horizon of 90 days Fossil is expected to generate 5.86 times less return on investment than Birks. But when comparing it to its historical volatility, Fossil Group is 1.07 times less risky than Birks. It trades about 0.02 of its potential returns per unit of risk. Birks Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 161.00 in Birks Group on November 1, 2024 and sell it today you would earn a total of 15.00 from holding Birks Group or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Fossil Group vs. Birks Group
Performance |
| Timeline |
| Fossil Group |
| Birks Group |
Fossil and Birks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fossil and Birks
The main advantage of trading using opposite Fossil and Birks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fossil position performs unexpectedly, Birks 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 Birks will offset losses from the drop in Birks' long position.| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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