Correlation Between Fossil and TheRealReal

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

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

Diversification Opportunities for Fossil and TheRealReal

0.83

Correlation Coefficient

Fossil  TheRealReal

Very poor diversification

The 3 months correlation between Fossil and TheRealReal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group and TheRealReal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TheRealReal and Fossil 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 Fossil Group are associated (or correlated) with TheRealReal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TheRealReal has no effect on the direction of Fossil i.e., Fossil and TheRealReal go up and down completely randomly.

Pair Corralation between Fossil and TheRealReal

Given the investment horizon of 90 days Fossil Group is expected to generate 1.15 times more return on investment than TheRealReal. However, Fossil is 1.15 times more volatile than TheRealReal. It trades about -0.1 of its potential returns per unit of risk. TheRealReal is currently generating about -0.19 per unit of risk. If you would invest  177.00  in Fossil Group on December 30, 2024 and sell it today you would lose (65.00) from holding Fossil Group or give up 36.72% of portfolio value over 90 days.

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

Fossil Group  vs.  TheRealReal

Fossil Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fossil Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

TheRealReal

Risk-Adjusted Performance

Very Weak

Over the last 90 days TheRealReal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Fossil and TheRealReal

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

The idea behind Fossil Group and TheRealReal 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..