Correlation Between Christian Dior and Streamwide

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

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

Diversification Opportunities for Christian Dior and Streamwide

0.71

Correlation Coefficient

Christian Dior  Streamwide

Poor diversification

The 3 months correlation between Christian and Streamwide is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and Streamwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Streamwide and Christian Dior 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 Christian Dior SE are associated (or correlated) with Streamwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Streamwide has no effect on the direction of Christian Dior i.e., Christian Dior and Streamwide go up and down completely randomly.

Pair Corralation between Christian Dior and Streamwide

Assuming the 90 days trading horizon Christian Dior is expected to generate 1.05 times less return on investment than Streamwide. But when comparing it to its historical volatility, Christian Dior SE is 1.02 times less risky than Streamwide. It trades about 0.05 of its potential returns per unit of risk. Streamwide is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,940  in Streamwide on September 12, 2024 and sell it today you would earn a total of  160.00  from holding Streamwide or generate 5.44% return on investment over 90 days.

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

Christian Dior SE  vs.  Streamwide

Christian Dior SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Christian Dior may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Streamwide

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Streamwide are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Streamwide may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Christian Dior and Streamwide

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

The idea behind Christian Dior SE and Streamwide 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.