Correlation Between Amer Sports, and Tapestry

Can any of the company-specific risk be diversified away by investing in both Amer Sports, and Tapestry 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 Amer Sports, and Tapestry into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amer Sports, and Tapestry, you can compare the effects of market volatilities on Amer Sports, and Tapestry 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 Amer Sports, with a short position of Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amer Sports, and Tapestry.

Diversification Opportunities for Amer Sports, and Tapestry

0.93

Correlation Coefficient

Amer Sports,  Tapestry

Almost no diversification

The 3 months correlation between Amer and Tapestry is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Amer Sports, and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry and Amer Sports, 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 Amer Sports, are associated (or correlated) with Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of Amer Sports, i.e., Amer Sports, and Tapestry go up and down completely randomly.

Pair Corralation between Amer Sports, and Tapestry

Allowing for the 90-day total investment horizon Amer Sports, is expected to generate 1.19 times more return on investment than Tapestry. However, Amer Sports, is 1.19 times more volatile than Tapestry. It trades about 0.37 of its potential returns per unit of risk. Tapestry is currently generating about 0.34 per unit of risk. If you would invest  2,369  in Amer Sports, on September 22, 2024 and sell it today you would earn a total of  449.00  from holding Amer Sports, or generate 18.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Amer Sports,  vs.  Tapestry

Amer Sports,

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amer Sports, are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Amer Sports, unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tapestry

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amer Sports, and Tapestry

The main advantage of trading using opposite Amer Sports, and Tapestry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amer Sports, position performs unexpectedly, Tapestry 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 Tapestry will offset losses from the drop in Tapestry's long position.

The idea behind Amer Sports, and Tapestry pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.