Correlation Between Movado and Watches Of
Can any of the company-specific risk be diversified away by investing in both Movado and Watches Of 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 Watches Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Movado Group and Watches of Switzerland, you can compare the effects of market volatilities on Movado and Watches Of 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 Watches Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movado and Watches Of.
Diversification Opportunities for Movado and Watches Of
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Movado and Watches is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and Watches of Switzerland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watches of Switzerland 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 Watches Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watches of Switzerland has no effect on the direction of Movado i.e., Movado and Watches Of go up and down completely randomly.
Pair Corralation between Movado and Watches Of
Considering the 90-day investment horizon Movado Group is expected to under-perform the Watches Of. But the stock apears to be less risky and, when comparing its historical volatility, Movado Group is 1.54 times less risky than Watches Of. The stock trades about -0.07 of its potential returns per unit of risk. The Watches of Switzerland is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 453.00 in Watches of Switzerland on September 3, 2024 and sell it today you would earn a total of 140.00 from holding Watches of Switzerland or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Movado Group vs. Watches of Switzerland
Performance |
| Timeline |
| Movado Group |
| Watches of Switzerland |
Movado and Watches Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Movado and Watches Of
The main advantage of trading using opposite Movado and Watches Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movado position performs unexpectedly, Watches Of 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 Watches Of will offset losses from the drop in Watches Of's long position.The idea behind Movado Group and Watches of Switzerland 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.| Watches Of vs. Kering SA | Watches Of vs. Burberry Group Plc | Watches Of vs. Prada Spa PK | Watches Of vs. Compagnie Financire Richemont |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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