Correlation Between Swatch and Pandora A/S
Can any of the company-specific risk be diversified away by investing in both Swatch and Pandora A/S 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 Pandora A/S 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 Pandora AS, you can compare the effects of market volatilities on Swatch and Pandora A/S 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 Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch and Pandora A/S.
Diversification Opportunities for Swatch and Pandora A/S
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Swatch and Pandora is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Swatch Group and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S 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 Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of Swatch i.e., Swatch and Pandora A/S go up and down completely randomly.
Pair Corralation between Swatch and Pandora A/S
Assuming the 90 days trading horizon The Swatch Group is expected to under-perform the Pandora A/S. In addition to that, Swatch is 1.87 times more volatile than Pandora AS. It trades about -0.02 of its total potential returns per unit of risk. Pandora AS is currently generating about 0.09 per unit of volatility. If you would invest 14,020 in Pandora AS on September 26, 2024 and sell it today you would earn a total of 3,000 from holding Pandora AS or generate 21.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Swatch Group vs. Pandora AS
Performance |
| Timeline |
| Swatch Group |
| Pandora A/S |
Swatch and Pandora A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swatch and Pandora A/S
The main advantage of trading using opposite Swatch and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.| Swatch vs. LVMH Mot Hennessy | Swatch vs. Herms International Socit | Swatch vs. CHRISTIAN DIOR ADR14EO2 | Swatch vs. Christian Dior SE |
| Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. Herms International Socit | Pandora A/S vs. CHRISTIAN DIOR ADR14EO2 | Pandora A/S 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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