Correlation Between Hermes International and Spartoo SAS
Can any of the company-specific risk be diversified away by investing in both Hermes International and Spartoo SAS 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 Hermes International and Spartoo SAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hermes International SCA and Spartoo SAS, you can compare the effects of market volatilities on Hermes International and Spartoo SAS 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 Hermes International with a short position of Spartoo SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermes International and Spartoo SAS.
Diversification Opportunities for Hermes International and Spartoo SAS
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hermes and Spartoo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hermes International SCA and Spartoo SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spartoo SAS and Hermes International 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 Hermes International SCA are associated (or correlated) with Spartoo SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spartoo SAS has no effect on the direction of Hermes International i.e., Hermes International and Spartoo SAS go up and down completely randomly.
Pair Corralation between Hermes International and Spartoo SAS
Assuming the 90 days trading horizon Hermes International SCA is expected to generate 0.44 times more return on investment than Spartoo SAS. However, Hermes International SCA is 2.25 times less risky than Spartoo SAS. It trades about -0.09 of its potential returns per unit of risk. Spartoo SAS is currently generating about -0.17 per unit of risk. If you would invest 206,100 in Hermes International SCA on August 24, 2024 and sell it today you would lose (7,400) from holding Hermes International SCA or give up 3.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hermes International SCA vs. Spartoo SAS
Performance |
| Timeline |
| Hermes International SCA |
| Spartoo SAS |
Hermes International and Spartoo SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermes International and Spartoo SAS
The main advantage of trading using opposite Hermes International and Spartoo SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermes International position performs unexpectedly, Spartoo SAS 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 Spartoo SAS will offset losses from the drop in Spartoo SAS's long position.| Hermes International vs. Kering SA | Hermes International vs. LVMH Mot Hennessy | Hermes International vs. LOreal SA | Hermes International vs. Christian Dior SE |
| Spartoo SAS vs. LVMH Mot Hennessy | Spartoo SAS vs. LOreal SA | Spartoo SAS vs. Hermes International SCA | Spartoo SAS vs. Manitou BF SA |
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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