Correlation Between Movado and TheRealReal

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

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

Diversification Opportunities for Movado and TheRealReal

-0.07

Correlation Coefficient

Movado  TheRealReal

Good diversification

The 3 months correlation between Movado and TheRealReal is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Movado Group and TheRealReal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TheRealReal 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 TheRealReal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TheRealReal has no effect on the direction of Movado i.e., Movado and TheRealReal go up and down completely randomly.

Pair Corralation between Movado and TheRealReal

Considering the 90-day investment horizon Movado is expected to generate 9.05 times less return on investment than TheRealReal. But when comparing it to its historical volatility, Movado Group is 3.01 times less risky than TheRealReal. It trades about 0.18 of its potential returns per unit of risk. TheRealReal is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest  304.00  in TheRealReal on August 30, 2024 and sell it today you would earn a total of  272.00  from holding TheRealReal or generate 89.47% 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.  TheRealReal

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.

TheRealReal

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TheRealReal are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, TheRealReal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Movado and TheRealReal

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

The idea behind Movado Group and TheRealReal 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.