Correlation Between Moncler SpA and Hugo Boss

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

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

Diversification Opportunities for Moncler SpA and Hugo Boss

0.54

Correlation Coefficient

Moncler SpA  Hugo Boss

Very weak diversification

The 3 months correlation between Moncler and Hugo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Moncler SpA and Hugo Boss AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugo Boss AG and Moncler SpA 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 Moncler SpA are associated (or correlated) with Hugo Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugo Boss AG has no effect on the direction of Moncler SpA i.e., Moncler SpA and Hugo Boss go up and down completely randomly.

Pair Corralation between Moncler SpA and Hugo Boss

Assuming the 90 days horizon Moncler SpA is expected to generate 1.49 times less return on investment than Hugo Boss. But when comparing it to its historical volatility, Moncler SpA is 2.5 times less risky than Hugo Boss. It trades about 0.22 of its potential returns per unit of risk. Hugo Boss AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,926  in Hugo Boss AG on September 23, 2024 and sell it today you would earn a total of  431.00  from holding Hugo Boss AG or generate 10.98% return on investment over 90 days.

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

Moncler SpA  vs.  Hugo Boss AG

Moncler SpA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moncler SpA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Moncler SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hugo Boss AG

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hugo Boss AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hugo Boss exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moncler SpA and Hugo Boss

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

The idea behind Moncler SpA and Hugo Boss AG 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.