Correlation Between Prada SpA and Watches Of

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

By analyzing existing cross correlation between Prada SpA and Watches of Switzerland, you can compare the effects of market volatilities on Prada SpA and Watches Of 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 Prada SpA with a short position of Watches Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prada SpA and Watches Of.

Diversification Opportunities for Prada SpA and Watches Of

0.05

Correlation Coefficient

Prada SpA  Watches Of

Significant diversification

The 3 months correlation between Prada and Watches is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Prada SpA and Watches of Switzerland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watches of Switzerland and Prada SpA 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 Prada SpA are associated (or correlated) with Watches Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watches of Switzerland has no effect on the direction of Prada SpA i.e., Prada SpA and Watches Of go up and down completely randomly.

Pair Corralation between Prada SpA and Watches Of

Assuming the 90 days horizon Prada SpA is expected to generate 1.49 times more return on investment than Watches Of. However, Prada SpA is 1.49 times more volatile than Watches of Switzerland. It trades about -0.02 of its potential returns per unit of risk. Watches of Switzerland is currently generating about -0.12 per unit of risk. If you would invest  763.00  in Prada SpA on December 29, 2024 and sell it today you would lose (61.00) from holding Prada SpA or give up 7.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Prada SpA  vs.  Watches of Switzerland

Prada SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prada SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Prada SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Watches of Switzerland

Risk-Adjusted Performance

Very Weak

Over the last 90 days Watches of Switzerland 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Prada SpA and Watches Of

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

The idea behind Prada SpA and Watches of Switzerland 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.