Correlation Between Swatch and Prada Spa
Can any of the company-specific risk be diversified away by investing in both Swatch and Prada Spa 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 and Prada Spa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Swatch Group and Prada Spa PK, you can compare the effects of market volatilities on Swatch and Prada Spa 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 with a short position of Prada Spa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch and Prada Spa.
Diversification Opportunities for Swatch and Prada Spa
Good diversification
The 3 months correlation between Swatch and Prada is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Swatch Group and Prada Spa PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prada Spa PK and Swatch 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 The Swatch Group are associated (or correlated) with Prada Spa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prada Spa PK has no effect on the direction of Swatch i.e., Swatch and Prada Spa go up and down completely randomly.
Pair Corralation between Swatch and Prada Spa
Assuming the 90 days horizon The Swatch Group is expected to under-perform the Prada Spa. But the pink sheet apears to be less risky and, when comparing its historical volatility, The Swatch Group is 1.24 times less risky than Prada Spa. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Prada Spa PK is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,046 in Prada Spa PK on September 13, 2024 and sell it today you would earn a total of 570.00 from holding Prada Spa PK or generate 54.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.28% |
| Values | Daily Returns |
The Swatch Group vs. Prada Spa PK
Performance |
| Timeline |
| Swatch Group |
| Prada Spa PK |
Swatch and Prada Spa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swatch and Prada Spa
The main advantage of trading using opposite Swatch and Prada Spa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch position performs unexpectedly, Prada Spa 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 Prada Spa will offset losses from the drop in Prada Spa's long position.| Swatch vs. Compagnie Financiere Richemont | Swatch vs. Burberry Group Plc | Swatch vs. Kering SA | Swatch vs. Prada Spa PK |
| Prada Spa vs. Kering SA | Prada Spa vs. Kering SA | Prada Spa vs. Prada SpA | Prada Spa vs. Compagnie Financiere 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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