Correlation Between Movado and AKA Brands

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

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

Diversification Opportunities for Movado and AKA Brands

-0.31

Correlation Coefficient

Movado  AKA Brands

Very good diversification

The 3 months correlation between Movado and AKA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and AKA Brands Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKA Brands Holding and Movado 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 Movado Group are associated (or correlated) with AKA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKA Brands Holding has no effect on the direction of Movado i.e., Movado and AKA Brands go up and down completely randomly.

Pair Corralation between Movado and AKA Brands

Considering the 90-day investment horizon Movado Group is expected to under-perform the AKA Brands. But the stock apears to be less risky and, when comparing its historical volatility, Movado Group is 3.43 times less risky than AKA Brands. The stock trades about -0.02 of its potential returns per unit of risk. The AKA Brands Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,524  in AKA Brands Holding on September 20, 2024 and sell it today you would earn a total of  521.00  from holding AKA Brands Holding or generate 34.19% return on investment over 90 days.

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

Movado Group  vs.  AKA Brands Holding

Movado Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Movado Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Movado is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AKA Brands Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AKA Brands Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Movado and AKA Brands

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

The idea behind Movado Group and AKA Brands Holding 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.