Correlation Between On Holding and Birkenstock Holding

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

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

Diversification Opportunities for On Holding and Birkenstock Holding

0.92

Correlation Coefficient

On Holding  Birkenstock Holding

Almost no diversification

The 3 months correlation between ONON and Birkenstock is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding On Holding and Birkenstock Holding plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birkenstock Holding plc and On Holding 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 On Holding are associated (or correlated) with Birkenstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birkenstock Holding plc has no effect on the direction of On Holding i.e., On Holding and Birkenstock Holding go up and down completely randomly.

Pair Corralation between On Holding and Birkenstock Holding

Given the investment horizon of 90 days On Holding is expected to generate 1.24 times more return on investment than Birkenstock Holding. However, On Holding is 1.24 times more volatile than Birkenstock Holding plc. It trades about -0.11 of its potential returns per unit of risk. Birkenstock Holding plc is currently generating about -0.14 per unit of risk. If you would invest  5,519  in On Holding on December 29, 2024 and sell it today you would lose (1,104) from holding On Holding or give up 20.0% of portfolio value over 90 days.

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

On Holding  vs.  Birkenstock Holding plc

On Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days On Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Birkenstock Holding plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Birkenstock Holding plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with On Holding and Birkenstock Holding

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

The idea behind On Holding and Birkenstock Holding plc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.