Correlation Between Kering SA and Burberry Group
Can any of the company-specific risk be diversified away by investing in both Kering SA and Burberry Group 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 Kering SA and Burberry Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kering SA and Burberry Group Plc, you can compare the effects of market volatilities on Kering SA and Burberry Group 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 Kering SA with a short position of Burberry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kering SA and Burberry Group.
Diversification Opportunities for Kering SA and Burberry Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kering and Burberry is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kering SA and Burberry Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burberry Group Plc and Kering SA 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 Kering SA are associated (or correlated) with Burberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burberry Group Plc has no effect on the direction of Kering SA i.e., Kering SA and Burberry Group go up and down completely randomly.
Pair Corralation between Kering SA and Burberry Group
Assuming the 90 days horizon Kering SA is expected to under-perform the Burberry Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kering SA is 1.32 times less risky than Burberry Group. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Burberry Group Plc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,548 in Burberry Group Plc on August 27, 2024 and sell it today you would lose (435.00) from holding Burberry Group Plc or give up 28.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kering SA vs. Burberry Group Plc
Performance |
| Timeline |
| Kering SA |
| Burberry Group Plc |
Kering SA and Burberry Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kering SA and Burberry Group
The main advantage of trading using opposite Kering SA and Burberry Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kering SA position performs unexpectedly, Burberry Group 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 Burberry Group will offset losses from the drop in Burberry Group's long position.| Kering SA vs. Burberry Group Plc | Kering SA vs. Swatch Group AG | Kering SA vs. Prada Spa PK | Kering SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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