Correlation Between Hermes International and Burberry Group
Can any of the company-specific risk be diversified away by investing in both Hermes International and Burberry Group 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 Hermes International and Burberry Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hermes International SCA and Burberry Group Plc, you can compare the effects of market volatilities on Hermes International and Burberry Group 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 Hermes International with a short position of Burberry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes International and Burberry Group.
Diversification Opportunities for Hermes International and Burberry Group
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hermes and Burberry is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hermes International SCA and Burberry Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burberry Group Plc and Hermes International 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 Hermes International SCA are associated (or correlated) with Burberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burberry Group Plc has no effect on the direction of Hermes International i.e., Hermes International and Burberry Group go up and down completely randomly.
Pair Corralation between Hermes International and Burberry Group
Assuming the 90 days horizon Hermes International SCA is expected to under-perform the Burberry Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Hermes International SCA is 1.8 times less risky than Burberry Group. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Burberry Group Plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 890.00 in Burberry Group Plc on August 30, 2024 and sell it today you would earn a total of 258.00 from holding Burberry Group Plc or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hermes International SCA vs. Burberry Group Plc
Performance |
| Timeline |
| Hermes International SCA |
| Burberry Group Plc |
Hermes International and Burberry Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermes International and Burberry Group
The main advantage of trading using opposite Hermes International and Burberry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes International position performs unexpectedly, Burberry Group 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 Burberry Group will offset losses from the drop in Burberry Group's long position.| Hermes International vs. Christian Dior SE | Hermes International vs. Burberry Group Plc | Hermes International vs. Compagnie Financiere Richemont | Hermes International vs. Hermes International SA |
| Burberry Group vs. Compagnie Financiere Richemont | Burberry Group vs. Hermes International SA | Burberry Group vs. Prada Spa PK | Burberry Group vs. Swatch Group AG |
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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