Correlation Between Grounded People and Tapestry

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

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

Diversification Opportunities for Grounded People and Tapestry

0.0

Correlation Coefficient

Grounded People  Tapestry

Pay attention - limited upside

The 3 months correlation between Grounded and Tapestry is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grounded People Apparel and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry and Grounded People 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 Grounded People Apparel are associated (or correlated) with Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of Grounded People i.e., Grounded People and Tapestry go up and down completely randomly.

Pair Corralation between Grounded People and Tapestry

If you would invest  4,456  in Tapestry on October 9, 2024 and sell it today you would earn a total of  2,310  from holding Tapestry or generate 51.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Grounded People Apparel  vs.  Tapestry

Grounded People Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grounded People Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Grounded People is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Tapestry

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grounded People and Tapestry

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

The idea behind Grounded People Apparel and Tapestry 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.