Correlation Between Ree Automotive and Movado

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

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

Diversification Opportunities for Ree Automotive and Movado

-0.39

Correlation Coefficient

Ree Automotive  Movado

Very good diversification

The 3 months correlation between Ree and Movado is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ree Automotive Holding and Movado Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Movado Group and Ree Automotive 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 Ree Automotive Holding are associated (or correlated) with Movado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Movado Group has no effect on the direction of Ree Automotive i.e., Ree Automotive and Movado go up and down completely randomly.

Pair Corralation between Ree Automotive and Movado

Considering the 90-day investment horizon Ree Automotive Holding is expected to generate 3.32 times more return on investment than Movado. However, Ree Automotive is 3.32 times more volatile than Movado Group. It trades about 0.17 of its potential returns per unit of risk. Movado Group is currently generating about -0.07 per unit of risk. If you would invest  368.00  in Ree Automotive Holding on August 30, 2024 and sell it today you would earn a total of  402.00  from holding Ree Automotive Holding or generate 109.24% return on investment over 90 days.

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

Ree Automotive Holding  vs.  Movado Group

Ree Automotive Holding

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ree Automotive Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ree Automotive exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Ree Automotive and Movado

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

The idea behind Ree Automotive Holding and Movado Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.