Correlation Between Lanvin Group and Signet Jewelers

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

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

Diversification Opportunities for Lanvin Group and Signet Jewelers

-0.52

Correlation Coefficient

Lanvin Group  Signet Jewelers

Excellent diversification

The 3 months correlation between Lanvin and Signet is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lanvin Group Holdings and Signet Jewelers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signet Jewelers and Lanvin 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 Lanvin Group Holdings are associated (or correlated) with Signet Jewelers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signet Jewelers has no effect on the direction of Lanvin Group i.e., Lanvin Group and Signet Jewelers go up and down completely randomly.

Pair Corralation between Lanvin Group and Signet Jewelers

Given the investment horizon of 90 days Lanvin Group Holdings is expected to under-perform the Signet Jewelers. In addition to that, Lanvin Group is 2.18 times more volatile than Signet Jewelers. It trades about -0.01 of its total potential returns per unit of risk. Signet Jewelers is currently generating about 0.12 per unit of volatility. If you would invest  8,384  in Signet Jewelers on August 30, 2024 and sell it today you would earn a total of  1,614  from holding Signet Jewelers or generate 19.25% return on investment over 90 days.

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

Lanvin Group Holdings  vs.  Signet Jewelers

Lanvin Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lanvin Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lanvin Group is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Signet Jewelers

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Signet Jewelers are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, Signet Jewelers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lanvin Group and Signet Jewelers

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

The idea behind Lanvin Group Holdings and Signet Jewelers 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.