Correlation Between Hermes International and Tapestry
Can any of the company-specific risk be diversified away by investing in both Hermes International and Tapestry 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 Tapestry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hermes International SA and Tapestry, you can compare the effects of market volatilities on Hermes International and Tapestry 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 Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes International and Tapestry.
Diversification Opportunities for Hermes International and Tapestry
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hermes and Tapestry is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hermes International SA and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry 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 SA are associated (or correlated) with Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of Hermes International i.e., Hermes International and Tapestry go up and down completely randomly.
Pair Corralation between Hermes International and Tapestry
Assuming the 90 days horizon Hermes International is expected to generate 1.71 times less return on investment than Tapestry. But when comparing it to its historical volatility, Hermes International SA is 1.22 times less risky than Tapestry. It trades about 0.04 of its potential returns per unit of risk. Tapestry is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,485 in Tapestry on August 27, 2024 and sell it today you would earn a total of 2,407 from holding Tapestry or generate 69.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hermes International SA vs. Tapestry
Performance |
| Timeline |
| Hermes International |
| Tapestry |
Hermes International and Tapestry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermes International and Tapestry
The main advantage of trading using opposite Hermes International and Tapestry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes International position performs unexpectedly, Tapestry 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 Tapestry will offset losses from the drop in Tapestry's long position.| Hermes International vs. LVMH Mot Hennessy | Hermes International vs. Kering SA | Hermes International vs. Capri Holdings | Hermes International vs. Tapestry |
| Tapestry vs. Signet Jewelers | Tapestry vs. Movado Group | Tapestry vs. Lanvin Group Holdings | Tapestry vs. TheRealReal |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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