Correlation Between Movado and Xcel Brands
Can any of the company-specific risk be diversified away by investing in both Movado and Xcel Brands 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 Xcel Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Movado Group and Xcel Brands, you can compare the effects of market volatilities on Movado and Xcel Brands 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 Xcel Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movado and Xcel Brands.
Diversification Opportunities for Movado and Xcel Brands
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Movado and Xcel is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Brands 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 Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of Movado i.e., Movado and Xcel Brands go up and down completely randomly.
Pair Corralation between Movado and Xcel Brands
Considering the 90-day investment horizon Movado Group is expected to generate 0.29 times more return on investment than Xcel Brands. However, Movado Group is 3.42 times less risky than Xcel Brands. It trades about 0.18 of its potential returns per unit of risk. Xcel Brands is currently generating about -0.46 per unit of risk. If you would invest 1,844 in Movado Group on September 21, 2024 and sell it today you would earn a total of 113.00 from holding Movado Group or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Movado Group vs. Xcel Brands
Performance |
| Timeline |
| Movado Group |
| Xcel Brands |
Movado and Xcel Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Movado and Xcel Brands
The main advantage of trading using opposite Movado and Xcel Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movado position performs unexpectedly, Xcel Brands 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 Xcel Brands will offset losses from the drop in Xcel Brands' long position.The idea behind Movado Group and Xcel Brands 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.| Xcel Brands vs. H M Hennes | Xcel Brands vs. Under Armour C | Xcel Brands vs. H M Hennes | Xcel Brands vs. Oxford Industries |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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