Correlation Between Movado and Birks

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

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

Diversification Opportunities for Movado and Birks

0.45

Correlation Coefficient

Movado  Birks

Very weak diversification

The 3 months correlation between Movado and Birks is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and Birks Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birks Group 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 Birks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birks Group has no effect on the direction of Movado i.e., Movado and Birks go up and down completely randomly.

Pair Corralation between Movado and Birks

Considering the 90-day investment horizon Movado Group is expected to generate 0.34 times more return on investment than Birks. However, Movado Group is 2.95 times less risky than Birks. It trades about -0.08 of its potential returns per unit of risk. Birks Group is currently generating about -0.05 per unit of risk. If you would invest  1,960  in Movado Group on December 28, 2024 and sell it today you would lose (172.00) from holding Movado Group or give up 8.78% of portfolio value over 90 days.

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

Movado Group  vs.  Birks Group

Movado Group

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Birks Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Birks 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Movado and Birks

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

The idea behind Movado Group and Birks Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.