Correlation Between HM HENMAUUNSPADR and Moncler SpA

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

By analyzing existing cross correlation between HM HENMAUUNSPADR 15 and Moncler SpA, you can compare the effects of market volatilities on HM HENMAUUNSPADR and Moncler SpA 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 HM HENMAUUNSPADR with a short position of Moncler SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of HM HENMAUUNSPADR and Moncler SpA.

Diversification Opportunities for HM HENMAUUNSPADR and Moncler SpA

0.7

Correlation Coefficient

HM HENMAUUNSPADR  Moncler SpA

Poor diversification

The 3 months correlation between HMSA and Moncler is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HM HENMAUUNSPADR 15 and Moncler SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moncler SpA and HM HENMAUUNSPADR 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 HM HENMAUUNSPADR 15 are associated (or correlated) with Moncler SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moncler SpA has no effect on the direction of HM HENMAUUNSPADR i.e., HM HENMAUUNSPADR and Moncler SpA go up and down completely randomly.

Pair Corralation between HM HENMAUUNSPADR and Moncler SpA

Assuming the 90 days trading horizon HM HENMAUUNSPADR is expected to generate 8.71 times less return on investment than Moncler SpA. But when comparing it to its historical volatility, HM HENMAUUNSPADR 15 is 1.04 times less risky than Moncler SpA. It trades about 0.03 of its potential returns per unit of risk. Moncler SpA is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  4,653  in Moncler SpA on October 1, 2024 and sell it today you would earn a total of  419.00  from holding Moncler SpA or generate 9.0% return on investment over 90 days.

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

HM HENMAUUNSPADR 15  vs.  Moncler SpA

HM HENMAUUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HM HENMAUUNSPADR 15 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Moncler SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moncler SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HM HENMAUUNSPADR and Moncler SpA

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

The idea behind HM HENMAUUNSPADR 15 and Moncler 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.