Correlation Between Swatch Group and Brunello Cucinelli

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

By analyzing existing cross correlation between Swatch Group AG and Brunello Cucinelli SpA, you can compare the effects of market volatilities on Swatch Group and Brunello Cucinelli 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 Swatch Group with a short position of Brunello Cucinelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch Group and Brunello Cucinelli.

Diversification Opportunities for Swatch Group and Brunello Cucinelli

0.6

Correlation Coefficient

Swatch Group  Brunello Cucinelli

Poor diversification

The 3 months correlation between Swatch and Brunello is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Swatch Group AG and Brunello Cucinelli SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunello Cucinelli SpA and Swatch 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 Swatch Group AG are associated (or correlated) with Brunello Cucinelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunello Cucinelli SpA has no effect on the direction of Swatch Group i.e., Swatch Group and Brunello Cucinelli go up and down completely randomly.

Pair Corralation between Swatch Group and Brunello Cucinelli

Assuming the 90 days horizon Swatch Group AG is expected to under-perform the Brunello Cucinelli. But the pink sheet apears to be less risky and, when comparing its historical volatility, Swatch Group AG is 1.44 times less risky than Brunello Cucinelli. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Brunello Cucinelli SpA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,094  in Brunello Cucinelli SpA on December 30, 2024 and sell it today you would earn a total of  60.00  from holding Brunello Cucinelli SpA or generate 5.48% return on investment over 90 days.

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

Swatch Group AG  vs.  Brunello Cucinelli SpA

Swatch Group AG

Risk-Adjusted Performance

Very Weak

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

Brunello Cucinelli SpA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brunello Cucinelli SpA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Brunello Cucinelli may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Swatch Group and Brunello Cucinelli

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

The idea behind Swatch Group AG and Brunello Cucinelli SpA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.