Correlation Between Fossil and Rackspace Technology
Can any of the company-specific risk be diversified away by investing in both Fossil and Rackspace Technology 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 Rackspace Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fossil Group and Rackspace Technology, you can compare the effects of market volatilities on Fossil and Rackspace Technology 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 Rackspace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fossil and Rackspace Technology.
Diversification Opportunities for Fossil and Rackspace Technology
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fossil and Rackspace is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology 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 Rackspace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackspace Technology has no effect on the direction of Fossil i.e., Fossil and Rackspace Technology go up and down completely randomly.
Pair Corralation between Fossil and Rackspace Technology
Given the investment horizon of 90 days Fossil Group is expected to generate 1.04 times more return on investment than Rackspace Technology. However, Fossil is 1.04 times more volatile than Rackspace Technology. It trades about 0.22 of its potential returns per unit of risk. Rackspace Technology is currently generating about 0.06 per unit of risk. If you would invest 117.00 in Fossil Group on August 30, 2024 and sell it today you would earn a total of 32.00 from holding Fossil Group or generate 27.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fossil Group vs. Rackspace Technology
Performance |
| Timeline |
| Fossil Group |
| Rackspace Technology |
Fossil and Rackspace Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fossil and Rackspace Technology
The main advantage of trading using opposite Fossil and Rackspace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fossil position performs unexpectedly, Rackspace Technology 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 Rackspace Technology will offset losses from the drop in Rackspace Technology's long position.| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
| Rackspace Technology vs. Crowdstrike Holdings | Rackspace Technology vs. Okta Inc | Rackspace Technology vs. Cloudflare | Rackspace Technology vs. MongoDB |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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