Correlation Between Brunello Cucinelli and Compagnie Financiere

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

By analyzing existing cross correlation between Brunello Cucinelli SpA and Compagnie Financiere Richemont, you can compare the effects of market volatilities on Brunello Cucinelli and Compagnie Financiere 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 Brunello Cucinelli with a short position of Compagnie Financiere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunello Cucinelli and Compagnie Financiere.

Diversification Opportunities for Brunello Cucinelli and Compagnie Financiere

0.81

Correlation Coefficient

Brunello Cucinelli  Compagnie Financiere

Very poor diversification

The 3 months correlation between Brunello and Compagnie is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brunello Cucinelli SpA and Compagnie Financiere Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere and Brunello Cucinelli 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 Brunello Cucinelli SpA are associated (or correlated) with Compagnie Financiere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financiere has no effect on the direction of Brunello Cucinelli i.e., Brunello Cucinelli and Compagnie Financiere go up and down completely randomly.

Pair Corralation between Brunello Cucinelli and Compagnie Financiere

Assuming the 90 days horizon Brunello Cucinelli SpA is expected to generate 1.12 times more return on investment than Compagnie Financiere. However, Brunello Cucinelli is 1.12 times more volatile than Compagnie Financiere Richemont. It trades about 0.02 of its potential returns per unit of risk. Compagnie Financiere Richemont is currently generating about -0.07 per unit of risk. If you would invest  4,916  in Brunello Cucinelli SpA on August 30, 2024 and sell it today you would earn a total of  34.00  from holding Brunello Cucinelli SpA or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Brunello Cucinelli SpA  vs.  Compagnie Financiere Richemont

Brunello Cucinelli SpA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brunello Cucinelli SpA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Brunello Cucinelli is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compagnie Financiere

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Financiere Richemont has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Brunello Cucinelli and Compagnie Financiere

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

The idea behind Brunello Cucinelli SpA and Compagnie Financiere Richemont 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..