Correlation Between Christian Dior and Itissalat

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

Diversification Opportunities for Christian Dior and Itissalat

-0.07

Correlation Coefficient

Christian Dior  Itissalat

Good diversification

The 3 months correlation between Christian and Itissalat is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and Itissalat Al Maghrib in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itissalat Al Maghrib 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 Itissalat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itissalat Al Maghrib has no effect on the direction of Christian Dior i.e., Christian Dior and Itissalat go up and down completely randomly.

Pair Corralation between Christian Dior and Itissalat

Assuming the 90 days trading horizon Christian Dior SE is expected to generate 1.71 times more return on investment than Itissalat. However, Christian Dior is 1.71 times more volatile than Itissalat Al Maghrib. It trades about 0.06 of its potential returns per unit of risk. Itissalat Al Maghrib is currently generating about -0.1 per unit of risk. If you would invest  57,026  in Christian Dior SE on September 23, 2024 and sell it today you would earn a total of  2,274  from holding Christian Dior SE or generate 3.99% return on investment over 90 days.

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

Christian Dior SE  vs.  Itissalat Al Maghrib

Christian Dior SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 4 (%) 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.

Itissalat Al Maghrib

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itissalat Al Maghrib has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Itissalat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Christian Dior and Itissalat

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

The idea behind Christian Dior SE and Itissalat Al Maghrib 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.