Correlation Between Movado and Culp

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

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

Diversification Opportunities for Movado and Culp

-0.4

Correlation Coefficient

Movado  Culp

Very good diversification

The 3 months correlation between Movado and Culp is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and Culp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Culp Inc 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 Culp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Culp Inc has no effect on the direction of Movado i.e., Movado and Culp go up and down completely randomly.

Pair Corralation between Movado and Culp

Considering the 90-day investment horizon Movado Group is expected to under-perform the Culp. In addition to that, Movado is 1.1 times more volatile than Culp Inc. It trades about -0.05 of its total potential returns per unit of risk. Culp Inc is currently generating about 0.07 per unit of volatility. If you would invest  480.00  in Culp Inc on September 1, 2024 and sell it today you would earn a total of  45.00  from holding Culp Inc or generate 9.38% return on investment over 90 days.

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

Movado Group  vs.  Culp Inc

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 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.

Culp Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Culp Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating essential indicators, Culp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Movado and Culp

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

The idea behind Movado Group and Culp Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.