Correlation Between Christian Dior and FIPP SA

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

Diversification Opportunities for Christian Dior and FIPP SA

-0.34

Correlation Coefficient

Christian Dior  FIPP SA

Very good diversification

The 3 months correlation between Christian and FIPP is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and FIPP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIPP SA 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 FIPP SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIPP SA has no effect on the direction of Christian Dior i.e., Christian Dior and FIPP SA go up and down completely randomly.

Pair Corralation between Christian Dior and FIPP SA

Assuming the 90 days trading horizon Christian Dior SE is expected to under-perform the FIPP SA. But the stock apears to be less risky and, when comparing its historical volatility, Christian Dior SE is 2.71 times less risky than FIPP SA. The stock trades about -0.02 of its potential returns per unit of risk. The FIPP SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13.00  in FIPP SA on October 13, 2024 and sell it today you would lose (1.00) from holding FIPP SA or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.62%
Values	Daily Returns

Christian Dior SE  vs.  FIPP SA

Christian Dior SE

Risk-Adjusted Performance

1 of 100

Weak

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

FIPP SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIPP SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Christian Dior and FIPP SA

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

The idea behind Christian Dior SE and FIPP SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.