Correlation Between Movado and Fossil
Can any of the company-specific risk be diversified away by investing in both Movado and Fossil 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 Movado and Fossil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Movado Group and Fossil Group, you can compare the effects of market volatilities on Movado and Fossil 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 Movado with a short position of Fossil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movado and Fossil.
Diversification Opportunities for Movado and Fossil
Significant diversification
The 3 months correlation between Movado and Fossil is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group and Movado 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 Movado Group are associated (or correlated) with Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Movado i.e., Movado and Fossil go up and down completely randomly.
Pair Corralation between Movado and Fossil
Considering the 90-day investment horizon Movado is expected to generate 1.09 times less return on investment than Fossil. But when comparing it to its historical volatility, Movado Group is 2.93 times less risky than Fossil. It trades about 0.06 of its potential returns per unit of risk. Fossil Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 115.00 in Fossil Group on August 23, 2024 and sell it today you would earn a total of 0.00 from holding Fossil Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Movado Group vs. Fossil Group
Performance |
| Timeline |
| Movado Group |
| Fossil Group |
Movado and Fossil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Movado and Fossil
The main advantage of trading using opposite Movado and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movado position performs unexpectedly, Fossil 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 Fossil will offset losses from the drop in Fossil's long position.The idea behind Movado Group and Fossil Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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