Correlation Between Swatch Group and Watches Of
Can any of the company-specific risk be diversified away by investing in both Swatch Group 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 Swatch Group and Watches Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swatch Group AG and Watches of Switzerland, you can compare the effects of market volatilities on Swatch Group 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 Swatch Group with a short position of Watches Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch Group and Watches Of.
Diversification Opportunities for Swatch Group and Watches Of
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Swatch and Watches is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Swatch Group AG 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 Swatch Group 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 Swatch Group AG 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 Swatch Group i.e., Swatch Group and Watches Of go up and down completely randomly.
Pair Corralation between Swatch Group and Watches Of
Assuming the 90 days horizon Swatch Group is expected to generate 7.53 times less return on investment than Watches Of. But when comparing it to its historical volatility, Swatch Group AG is 2.8 times less risky than Watches Of. It trades about 0.14 of its potential returns per unit of risk. Watches of Switzerland is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 542.00 in Watches of Switzerland on September 13, 2024 and sell it today you would earn a total of 193.00 from holding Watches of Switzerland or generate 35.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swatch Group AG vs. Watches of Switzerland
Performance |
| Timeline |
| Swatch Group AG |
| Watches of Switzerland |
Swatch Group and Watches Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swatch Group and Watches Of
The main advantage of trading using opposite Swatch Group and Watches Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch Group 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.| Swatch Group vs. Kering SA | Swatch Group vs. Kering SA | Swatch Group vs. Prada SpA | Swatch Group vs. Compagnie Financiere Richemont |
| Watches Of vs. Brunello Cucinelli SpA | Watches Of vs. Swatch Group AG | Watches Of vs. Prada Spa PK | Watches Of vs. Christian Dior SE |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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