Correlation Between Ralph Lauren and Pandora AS

Can any of the company-specific risk be diversified away by investing in both Ralph Lauren and Pandora AS 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 Pandora AS 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 Pandora AS, you can compare the effects of market volatilities on Ralph Lauren and Pandora AS 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 Pandora AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ralph Lauren and Pandora AS.

Diversification Opportunities for Ralph Lauren and Pandora AS

0.4

Correlation Coefficient

Ralph Lauren  Pandora AS

Very weak diversification

The 3 months correlation between Ralph and Pandora is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora AS 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 Pandora AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora AS has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Pandora AS go up and down completely randomly.

Pair Corralation between Ralph Lauren and Pandora AS

Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 1.5 times more return on investment than Pandora AS. However, Ralph Lauren is 1.5 times more volatile than Pandora AS. It trades about -0.03 of its potential returns per unit of risk. Pandora AS is currently generating about -0.17 per unit of risk. If you would invest  23,137  in Ralph Lauren Corp on December 29, 2024 and sell it today you would lose (1,569) from holding Ralph Lauren Corp or give up 6.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Ralph Lauren Corp  vs.  Pandora AS

Ralph Lauren Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ralph Lauren Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Ralph Lauren is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pandora AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pandora AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ralph Lauren and Pandora AS

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

The idea behind Ralph Lauren Corp and Pandora AS 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.