Correlation Between Kontoor Brands and Ermenegildo Zegna
Can any of the company-specific risk be diversified away by investing in both Kontoor Brands and Ermenegildo Zegna 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 Kontoor Brands and Ermenegildo Zegna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kontoor Brands and Ermenegildo Zegna NV, you can compare the effects of market volatilities on Kontoor Brands and Ermenegildo Zegna 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 Kontoor Brands with a short position of Ermenegildo Zegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Ermenegildo Zegna.
Diversification Opportunities for Kontoor Brands and Ermenegildo Zegna
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kontoor and Ermenegildo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Ermenegildo Zegna NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ermenegildo Zegna and Kontoor Brands 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 Kontoor Brands are associated (or correlated) with Ermenegildo Zegna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ermenegildo Zegna has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and Ermenegildo Zegna go up and down completely randomly.
Pair Corralation between Kontoor Brands and Ermenegildo Zegna
Considering the 90-day investment horizon Kontoor Brands is expected to generate 9.76 times less return on investment than Ermenegildo Zegna. But when comparing it to its historical volatility, Kontoor Brands is 1.41 times less risky than Ermenegildo Zegna. It trades about 0.03 of its potential returns per unit of risk. Ermenegildo Zegna NV is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 792.00 in Ermenegildo Zegna NV on November 8, 2024 and sell it today you would earn a total of 105.00 from holding Ermenegildo Zegna NV or generate 13.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kontoor Brands vs. Ermenegildo Zegna NV
Performance |
| Timeline |
| Kontoor Brands |
| Ermenegildo Zegna |
Kontoor Brands and Ermenegildo Zegna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kontoor Brands and Ermenegildo Zegna
The main advantage of trading using opposite Kontoor Brands and Ermenegildo Zegna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands position performs unexpectedly, Ermenegildo Zegna 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 Ermenegildo Zegna will offset losses from the drop in Ermenegildo Zegna's long position.| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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