Correlation Between Fossil Group and Argo Blockchain

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

By analyzing existing cross correlation between Fossil Group 7 and Argo Blockchain plc, you can compare the effects of market volatilities on Fossil Group and Argo Blockchain 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 Fossil Group with a short position of Argo Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fossil Group and Argo Blockchain.

Diversification Opportunities for Fossil Group and Argo Blockchain

-0.19

Correlation Coefficient

Fossil Group  Argo Blockchain

Good diversification

The 3 months correlation between Fossil and Argo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group 7 and Argo Blockchain plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Blockchain plc and Fossil 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 Fossil Group 7 are associated (or correlated) with Argo Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Blockchain plc has no effect on the direction of Fossil Group i.e., Fossil Group and Argo Blockchain go up and down completely randomly.

Pair Corralation between Fossil Group and Argo Blockchain

Assuming the 90 days horizon Fossil Group 7 is expected to generate 0.72 times more return on investment than Argo Blockchain. However, Fossil Group 7 is 1.39 times less risky than Argo Blockchain. It trades about 0.06 of its potential returns per unit of risk. Argo Blockchain plc is currently generating about 0.01 per unit of risk. If you would invest  1,351  in Fossil Group 7 on September 3, 2024 and sell it today you would earn a total of  66.00  from holding Fossil Group 7 or generate 4.89% return on investment over 90 days.

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

Fossil Group 7  vs.  Argo Blockchain plc

Fossil Group 7

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fossil Group 7 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Fossil Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Argo Blockchain plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argo Blockchain plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Argo Blockchain is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Fossil Group and Argo Blockchain

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

The idea behind Fossil Group 7 and Argo Blockchain plc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.