Correlation Between Watches Of and Brunello Cucinelli

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

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

Diversification Opportunities for Watches Of and Brunello Cucinelli

0.15

Correlation Coefficient

Watches Of  Brunello Cucinelli

Average diversification

The 3 months correlation between Watches and Brunello is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Watches of Switzerland 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 Watches Of 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 Watches of Switzerland 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 Watches Of i.e., Watches Of and Brunello Cucinelli go up and down completely randomly.

Pair Corralation between Watches Of and Brunello Cucinelli

Assuming the 90 days horizon Watches of Switzerland is expected to under-perform the Brunello Cucinelli. But the pink sheet apears to be less risky and, when comparing its historical volatility, Watches of Switzerland is 1.08 times less risky than Brunello Cucinelli. The pink sheet trades about -0.12 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	Insignificant
Accuracy	98.41%
Values	Daily Returns

Watches of Switzerland  vs.  Brunello Cucinelli SpA

Watches of Switzerland

Risk-Adjusted Performance

Very Weak

Over the last 90 days Watches of Switzerland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Watches Of and Brunello Cucinelli

The main advantage of trading using opposite Watches Of and Brunello Cucinelli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Watches Of 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 Watches of Switzerland 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 Global Correlations module to find global opportunities by holding instruments from different markets.