Correlation Between Lanvin Group and Tapestry

Can any of the company-specific risk be diversified away by investing in both Lanvin Group and Tapestry 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 Tapestry 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 Tapestry, you can compare the effects of market volatilities on Lanvin Group and Tapestry 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 Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lanvin Group and Tapestry.

Diversification Opportunities for Lanvin Group and Tapestry

-0.52

Correlation Coefficient

Lanvin Group  Tapestry

Excellent diversification

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

Pair Corralation between Lanvin Group and Tapestry

Given the investment horizon of 90 days Lanvin Group Holdings is expected to under-perform the Tapestry. In addition to that, Lanvin Group is 2.06 times more volatile than Tapestry. It trades about -0.01 of its total potential returns per unit of risk. Tapestry is currently generating about 0.24 per unit of volatility. If you would invest  4,062  in Tapestry on August 30, 2024 and sell it today you would earn a total of  2,030  from holding Tapestry or generate 49.98% 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.  Tapestry

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.

Tapestry

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lanvin Group and Tapestry

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

The idea behind Lanvin Group Holdings and Tapestry 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.