Correlation Between Revolve Group and Coty

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

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

Diversification Opportunities for Revolve Group and Coty

0.76

Correlation Coefficient

Revolve Group  Coty

Poor diversification

The 3 months correlation between Revolve and Coty is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Revolve Group LLC and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and Revolve Group 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 Revolve Group LLC are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of Revolve Group i.e., Revolve Group and Coty go up and down completely randomly.

Pair Corralation between Revolve Group and Coty

Given the investment horizon of 90 days Revolve Group LLC is expected to under-perform the Coty. In addition to that, Revolve Group is 1.28 times more volatile than Coty Inc. It trades about -0.18 of its total potential returns per unit of risk. Coty Inc is currently generating about -0.15 per unit of volatility. If you would invest  699.00  in Coty Inc on December 27, 2024 and sell it today you would lose (153.00) from holding Coty Inc or give up 21.89% of portfolio value over 90 days.

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

Revolve Group LLC  vs.  Coty Inc

Revolve Group LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Revolve Group LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Coty Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly 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 Revolve Group and Coty

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

The idea behind Revolve Group LLC and Coty Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.