Correlation Between Christian Dior and Salvatore Ferragamo

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

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

Diversification Opportunities for Christian Dior and Salvatore Ferragamo

0.86

Correlation Coefficient

Christian Dior  Salvatore Ferragamo

Very poor diversification

The 3 months correlation between Christian and Salvatore is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and Salvatore Ferragamo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salvatore Ferragamo SpA and Christian Dior 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 Christian Dior SE are associated (or correlated) with Salvatore Ferragamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salvatore Ferragamo SpA has no effect on the direction of Christian Dior i.e., Christian Dior and Salvatore Ferragamo go up and down completely randomly.

Pair Corralation between Christian Dior and Salvatore Ferragamo

Assuming the 90 days horizon Christian Dior SE is expected to generate 0.65 times more return on investment than Salvatore Ferragamo. However, Christian Dior SE is 1.53 times less risky than Salvatore Ferragamo. It trades about -0.02 of its potential returns per unit of risk. Salvatore Ferragamo SpA is currently generating about -0.07 per unit of risk. If you would invest  19,101  in Christian Dior SE on September 12, 2024 and sell it today you would lose (2,959) from holding Christian Dior SE or give up 15.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.57%
Values	Daily Returns

Christian Dior SE  vs.  Salvatore Ferragamo SpA

Christian Dior SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Christian Dior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Salvatore Ferragamo SpA

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Christian Dior and Salvatore Ferragamo

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

The idea behind Christian Dior SE and Salvatore Ferragamo 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.