Correlation Between Ralph Lauren and Fenbo Holdings
Can any of the company-specific risk be diversified away by investing in both Ralph Lauren and Fenbo Holdings 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 Ralph Lauren and Fenbo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ralph Lauren Corp and Fenbo Holdings Limited, you can compare the effects of market volatilities on Ralph Lauren and Fenbo Holdings 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 Ralph Lauren with a short position of Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ralph Lauren and Fenbo Holdings.
Diversification Opportunities for Ralph Lauren and Fenbo Holdings
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ralph and Fenbo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings and Ralph Lauren 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 Ralph Lauren Corp are associated (or correlated) with Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Fenbo Holdings go up and down completely randomly.
Pair Corralation between Ralph Lauren and Fenbo Holdings
Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 0.98 times more return on investment than Fenbo Holdings. However, Ralph Lauren Corp is 1.03 times less risky than Fenbo Holdings. It trades about 0.3 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about -0.39 per unit of risk. If you would invest 24,046 in Ralph Lauren Corp on November 18, 2024 and sell it today you would earn a total of 4,217 from holding Ralph Lauren Corp or generate 17.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ralph Lauren Corp vs. Fenbo Holdings Limited
Performance |
| Timeline |
| Ralph Lauren Corp |
| Fenbo Holdings |
Ralph Lauren and Fenbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ralph Lauren and Fenbo Holdings
The main advantage of trading using opposite Ralph Lauren and Fenbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ralph Lauren position performs unexpectedly, Fenbo Holdings 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 Fenbo Holdings will offset losses from the drop in Fenbo Holdings' long position.| Ralph Lauren vs. Columbia Sportswear | Ralph Lauren vs. Kontoor Brands | Ralph Lauren vs. Levi Strauss Co | Ralph Lauren vs. G III Apparel Group |
| Fenbo Holdings vs. CDW Corp | Fenbo Holdings vs. RBC Bearings Incorporated | Fenbo Holdings vs. The Gap, | Fenbo Holdings vs. Coupang LLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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