Correlation Between Brilliant Earth and Lanvin Group

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

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

Diversification Opportunities for Brilliant Earth and Lanvin Group

0.13

Correlation Coefficient

Brilliant Earth  Lanvin Group

Average diversification

The 3 months correlation between Brilliant and Lanvin is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and Lanvin Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanvin Group Holdings and Brilliant Earth 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 Brilliant Earth Group are associated (or correlated) with Lanvin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanvin Group Holdings has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and Lanvin Group go up and down completely randomly.

Pair Corralation between Brilliant Earth and Lanvin Group

Given the investment horizon of 90 days Brilliant Earth Group is expected to generate 0.71 times more return on investment than Lanvin Group. However, Brilliant Earth Group is 1.4 times less risky than Lanvin Group. It trades about 0.01 of its potential returns per unit of risk. Lanvin Group Holdings is currently generating about -0.01 per unit of risk. If you would invest  192.00  in Brilliant Earth Group on August 30, 2024 and sell it today you would lose (6.00) from holding Brilliant Earth Group or give up 3.12% of portfolio value over 90 days.

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

Brilliant Earth Group  vs.  Lanvin Group Holdings

Brilliant Earth Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brilliant Earth Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Brilliant Earth is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Lanvin Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lanvin Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lanvin Group is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Brilliant Earth and Lanvin Group

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

The idea behind Brilliant Earth Group and Lanvin Group Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.