Correlation Between Virgin Group and Coty
Can any of the company-specific risk be diversified away by investing in both Virgin Group and Coty 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 Virgin Group and Coty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Group Acquisition and Coty Inc, you can compare the effects of market volatilities on Virgin Group and Coty 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 Virgin Group with a short position of Coty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Group and Coty.
Diversification Opportunities for Virgin Group and Coty
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Virgin and Coty is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Group Acquisition and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and Virgin Group 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 Virgin Group Acquisition are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of Virgin Group i.e., Virgin Group and Coty go up and down completely randomly.
Pair Corralation between Virgin Group and Coty
Given the investment horizon of 90 days Virgin Group Acquisition is expected to generate 2.09 times more return on investment than Coty. However, Virgin Group is 2.09 times more volatile than Coty Inc. It trades about 0.0 of its potential returns per unit of risk. Coty Inc is currently generating about -0.09 per unit of risk. If you would invest 136.00 in Virgin Group Acquisition on August 24, 2024 and sell it today you would lose (2.00) from holding Virgin Group Acquisition or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Group Acquisition vs. Coty Inc
Performance |
| Timeline |
| Virgin Group Acquisition |
| Coty Inc |
Virgin Group and Coty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Group and Coty
The main advantage of trading using opposite Virgin Group and Coty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Group position performs unexpectedly, Coty 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 Coty will offset losses from the drop in Coty's long position.| Virgin Group vs. Mannatech Incorporated | Virgin Group vs. Edgewell Personal Care | Virgin Group vs. Inter Parfums | Virgin Group vs. Nu Skin Enterprises |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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