Correlation Between Brilliant Earth and Movado

Can any of the company-specific risk be diversified away by investing in both Brilliant Earth and Movado 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 Movado 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 Movado Group, you can compare the effects of market volatilities on Brilliant Earth and Movado 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 Movado. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Earth and Movado.

Diversification Opportunities for Brilliant Earth and Movado

0.47

Correlation Coefficient

Brilliant Earth  Movado

Very weak diversification

The 3 months correlation between Brilliant and Movado is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and Movado Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Movado Group 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 Movado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Movado Group has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and Movado go up and down completely randomly.

Pair Corralation between Brilliant Earth and Movado

Given the investment horizon of 90 days Brilliant Earth Group is expected to under-perform the Movado. In addition to that, Brilliant Earth is 2.67 times more volatile than Movado Group. It trades about -0.08 of its total potential returns per unit of risk. Movado Group is currently generating about -0.11 per unit of volatility. If you would invest  1,960  in Movado Group on December 29, 2024 and sell it today you would lose (237.00) from holding Movado Group or give up 12.09% of portfolio value over 90 days.

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

Brilliant Earth Group  vs.  Movado Group

Brilliant Earth Group

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Movado Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Movado Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Brilliant Earth and Movado

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

The idea behind Brilliant Earth Group and Movado Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.