Correlation Between Ralph Lauren and Wang Lee

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

Diversification Opportunities for Ralph Lauren and Wang Lee

0.18

Correlation Coefficient

Ralph Lauren  Wang Lee

Average diversification

The 3 months correlation between Ralph and Wang is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Wang Lee Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wang Lee Group, 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 Wang Lee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wang Lee Group, has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Wang Lee go up and down completely randomly.

Pair Corralation between Ralph Lauren and Wang Lee

Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 0.12 times more return on investment than Wang Lee. However, Ralph Lauren Corp is 8.56 times less risky than Wang Lee. It trades about 0.13 of its potential returns per unit of risk. Wang Lee Group, is currently generating about -0.25 per unit of risk. If you would invest  22,732  in Ralph Lauren Corp on October 8, 2024 and sell it today you would earn a total of  717.00  from holding Ralph Lauren Corp or generate 3.15% return on investment over 90 days.

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

Ralph Lauren Corp  vs.  Wang Lee Group,

Ralph Lauren Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 14 (%) 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.

Wang Lee Group,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ralph Lauren and Wang Lee

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

The idea behind Ralph Lauren Corp and Wang Lee 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.