Correlation Between Christian Dior and Watches Of

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

Diversification Opportunities for Christian Dior and Watches Of

0.19

Correlation Coefficient

Christian Dior  Watches Of

Average diversification

The 3 months correlation between Christian and Watches is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and Watches of Switzerland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watches of Switzerland 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 Watches Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watches of Switzerland has no effect on the direction of Christian Dior i.e., Christian Dior and Watches Of go up and down completely randomly.

Pair Corralation between Christian Dior and Watches Of

Assuming the 90 days horizon Christian Dior SE is expected to under-perform the Watches Of. In addition to that, Christian Dior is 1.24 times more volatile than Watches of Switzerland. It trades about -0.12 of its total potential returns per unit of risk. Watches of Switzerland is currently generating about -0.03 per unit of volatility. If you would invest  625.00  in Watches of Switzerland on August 30, 2024 and sell it today you would lose (32.00) from holding Watches of Switzerland or give up 5.12% of portfolio value over 90 days.

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

Christian Dior SE  vs.  Watches of Switzerland

Christian Dior SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Christian Dior SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Watches of Switzerland

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Watches of Switzerland are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Watches Of reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Christian Dior and Watches Of

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

The idea behind Christian Dior SE and Watches of Switzerland 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.