Correlation Between Oxford Industries and Ermenegildo Zegna

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

By analyzing existing cross correlation between Oxford Industries and Ermenegildo Zegna NV, you can compare the effects of market volatilities on Oxford Industries and Ermenegildo Zegna 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 Oxford Industries with a short position of Ermenegildo Zegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Industries and Ermenegildo Zegna.

Diversification Opportunities for Oxford Industries and Ermenegildo Zegna

-0.2

Correlation Coefficient

Oxford Industries  Ermenegildo Zegna

Good diversification

The 3 months correlation between Oxford and Ermenegildo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Industries and Ermenegildo Zegna NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ermenegildo Zegna and Oxford Industries 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 Oxford Industries are associated (or correlated) with Ermenegildo Zegna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ermenegildo Zegna has no effect on the direction of Oxford Industries i.e., Oxford Industries and Ermenegildo Zegna go up and down completely randomly.

Pair Corralation between Oxford Industries and Ermenegildo Zegna

Considering the 90-day investment horizon Oxford Industries is expected to under-perform the Ermenegildo Zegna. In addition to that, Oxford Industries is 1.09 times more volatile than Ermenegildo Zegna NV. It trades about -0.16 of its total potential returns per unit of risk. Ermenegildo Zegna NV is currently generating about 0.03 per unit of volatility. If you would invest  820.00  in Ermenegildo Zegna NV on December 2, 2024 and sell it today you would earn a total of  25.00  from holding Ermenegildo Zegna NV or generate 3.05% return on investment over 90 days.

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

Oxford Industries  vs.  Ermenegildo Zegna NV

Oxford Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oxford Industries 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 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.

Ermenegildo Zegna

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ermenegildo Zegna NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Ermenegildo Zegna is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Oxford Industries and Ermenegildo Zegna

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

The idea behind Oxford Industries and Ermenegildo Zegna NV 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.