Correlation Between Swatch Group and Compagnie Financière
Can any of the company-specific risk be diversified away by investing in both Swatch Group and Compagnie Financière 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 Compagnie Financière 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 Compagnie Financire Richemont, you can compare the effects of market volatilities on Swatch Group and Compagnie Financière 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 Compagnie Financière. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch Group and Compagnie Financière.
Diversification Opportunities for Swatch Group and Compagnie Financière
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Swatch and Compagnie is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding The Swatch Group and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financière 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 The Swatch Group are associated (or correlated) with Compagnie Financière. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financière has no effect on the direction of Swatch Group i.e., Swatch Group and Compagnie Financière go up and down completely randomly.
Pair Corralation between Swatch Group and Compagnie Financière
Assuming the 90 days trading horizon The Swatch Group is expected to under-perform the Compagnie Financière. In addition to that, Swatch Group is 1.19 times more volatile than Compagnie Financire Richemont. It trades about -0.06 of its total potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.08 per unit of volatility. If you would invest 1,350 in Compagnie Financire Richemont on October 14, 2024 and sell it today you would earn a total of 140.00 from holding Compagnie Financire Richemont or generate 10.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
The Swatch Group vs. Compagnie Financire Richemont
Performance |
Timeline |
Swatch Group |
Compagnie Financière |
Swatch Group and Compagnie Financière Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Swatch Group and Compagnie Financière
The main advantage of trading using opposite Swatch Group and Compagnie Financière positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch Group position performs unexpectedly, Compagnie Financière 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 Compagnie Financière will offset losses from the drop in Compagnie Financière's long position.Swatch Group vs. LVMH Mot Hennessy | Swatch Group vs. LVMH Mot Hennessy | Swatch Group vs. Christian Dior SE | Swatch Group vs. Compagnie Financire Richemont |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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