Correlation Between Charles Colvard and Fossil

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

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

Diversification Opportunities for Charles Colvard and Fossil

-0.54

Correlation Coefficient

Charles Colvard  Fossil

Excellent diversification

The 3 months correlation between Charles and Fossil is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Charles Colvard and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group and Charles Colvard 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 Charles Colvard are associated (or correlated) with Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Charles Colvard i.e., Charles Colvard and Fossil go up and down completely randomly.

Pair Corralation between Charles Colvard and Fossil

Given the investment horizon of 90 days Charles Colvard is expected to under-perform the Fossil. But the stock apears to be less risky and, when comparing its historical volatility, Charles Colvard is 1.61 times less risky than Fossil. The stock trades about -0.01 of its potential returns per unit of risk. The Fossil Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  102.00  in Fossil Group on September 12, 2024 and sell it today you would earn a total of  101.00  from holding Fossil Group or generate 99.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Charles Colvard  vs.  Fossil Group

Charles Colvard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charles Colvard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Charles Colvard is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Fossil Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fossil Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Fossil disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charles Colvard and Fossil

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

The idea behind Charles Colvard and Fossil Group 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .