Correlation Between Movado and Lands End

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

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

Diversification Opportunities for Movado and Lands End

-0.54

Correlation Coefficient

Movado  Lands End

Excellent diversification

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

Pair Corralation between Movado and Lands End

Considering the 90-day investment horizon Movado Group is expected to generate 0.35 times more return on investment than Lands End. However, Movado Group is 2.82 times less risky than Lands End. It trades about 0.14 of its potential returns per unit of risk. Lands End is currently generating about -0.12 per unit of risk. If you would invest  1,875  in Movado Group on September 22, 2024 and sell it today you would earn a total of  82.00  from holding Movado Group or generate 4.37% 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.  Lands End

Movado Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Movado Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Lands End

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lands End has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Movado and Lands End

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

The idea behind Movado Group and Lands End 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.