Correlation Between Tapestry and Hermes International
Can any of the company-specific risk be diversified away by investing in both Tapestry and Hermes International 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 Tapestry and Hermes International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tapestry and Hermes International SCA, you can compare the effects of market volatilities on Tapestry and Hermes International 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 Tapestry with a short position of Hermes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tapestry and Hermes International.
Diversification Opportunities for Tapestry and Hermes International
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tapestry and Hermes is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tapestry and Hermes International SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermes International SCA and Tapestry 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 Tapestry are associated (or correlated) with Hermes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermes International SCA has no effect on the direction of Tapestry i.e., Tapestry and Hermes International go up and down completely randomly.
Pair Corralation between Tapestry and Hermes International
Considering the 90-day investment horizon Tapestry is expected to generate 1.81 times less return on investment than Hermes International. But when comparing it to its historical volatility, Tapestry is 1.07 times less risky than Hermes International. It trades about 0.28 of its potential returns per unit of risk. Hermes International SCA is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 233,250 in Hermes International SCA on November 3, 2024 and sell it today you would earn a total of 49,850 from holding Hermes International SCA or generate 21.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tapestry vs. Hermes International SCA
Performance |
| Timeline |
| Tapestry |
| Hermes International SCA |
Tapestry and Hermes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tapestry and Hermes International
The main advantage of trading using opposite Tapestry and Hermes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tapestry position performs unexpectedly, Hermes International 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 Hermes International will offset losses from the drop in Hermes International's long position.| Tapestry vs. Signet Jewelers | Tapestry vs. Movado Group | Tapestry vs. Lanvin Group Holdings | Tapestry vs. TheRealReal |
| Hermes International vs. Christian Dior SE | Hermes International vs. Burberry Group Plc | Hermes International vs. Compagnie Financiere Richemont | Hermes International vs. Hermes International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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