Correlation Between Ralph Lauren and Genfit

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

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

Diversification Opportunities for Ralph Lauren and Genfit

-0.38

Correlation Coefficient

Ralph Lauren  Genfit

Very good diversification

The 3 months correlation between Ralph and Genfit is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit and Ralph Lauren 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 Ralph Lauren Corp are associated (or correlated) with Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Genfit go up and down completely randomly.

Pair Corralation between Ralph Lauren and Genfit

Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 0.51 times more return on investment than Genfit. However, Ralph Lauren Corp is 1.97 times less risky than Genfit. It trades about 0.1 of its potential returns per unit of risk. Genfit is currently generating about 0.02 per unit of risk. If you would invest  9,969  in Ralph Lauren Corp on September 15, 2024 and sell it today you would earn a total of  12,776  from holding Ralph Lauren Corp or generate 128.16% return on investment over 90 days.

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

Ralph Lauren Corp  vs.  Genfit

Ralph Lauren Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Ralph Lauren disclosed solid returns over the last few months and may actually be approaching a breakup point.

Genfit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Genfit is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ralph Lauren and Genfit

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

The idea behind Ralph Lauren Corp and Genfit 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.