Correlation Between Salvatore Ferragamo and Kering SA

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

By analyzing existing cross correlation between Salvatore Ferragamo SpA and Kering SA, you can compare the effects of market volatilities on Salvatore Ferragamo and Kering SA 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 Salvatore Ferragamo with a short position of Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salvatore Ferragamo and Kering SA.

Diversification Opportunities for Salvatore Ferragamo and Kering SA

0.69

Correlation Coefficient

Salvatore Ferragamo  Kering SA

Poor diversification

The 3 months correlation between Salvatore and Kering is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Salvatore Ferragamo SpA and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA and Salvatore Ferragamo 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 Salvatore Ferragamo SpA are associated (or correlated) with Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Salvatore Ferragamo i.e., Salvatore Ferragamo and Kering SA go up and down completely randomly.

Pair Corralation between Salvatore Ferragamo and Kering SA

Assuming the 90 days horizon Salvatore Ferragamo SpA is expected to generate 1.3 times more return on investment than Kering SA. However, Salvatore Ferragamo is 1.3 times more volatile than Kering SA. It trades about 0.0 of its potential returns per unit of risk. Kering SA is currently generating about -0.07 per unit of risk. If you would invest  351.00  in Salvatore Ferragamo SpA on December 30, 2024 and sell it today you would lose (13.00) from holding Salvatore Ferragamo SpA or give up 3.7% of portfolio value over 90 days.

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

Salvatore Ferragamo SpA  vs.  Kering SA

Salvatore Ferragamo SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salvatore Ferragamo SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Salvatore Ferragamo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kering SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kering SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Salvatore Ferragamo and Kering SA

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

The idea behind Salvatore Ferragamo SpA and Kering SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.