Correlation Between Main Street and Christian Dior

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

By analyzing existing cross correlation between Main Street Capital and Christian Dior SE, you can compare the effects of market volatilities on Main Street and Christian Dior 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 Main Street with a short position of Christian Dior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Christian Dior.

Diversification Opportunities for Main Street and Christian Dior

-0.66

Correlation Coefficient

Main Street  Christian Dior

Excellent diversification

The 3 months correlation between Main and Christian is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Christian Dior SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Christian Dior SE and Main Street 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 Main Street Capital are associated (or correlated) with Christian Dior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Christian Dior SE has no effect on the direction of Main Street i.e., Main Street and Christian Dior go up and down completely randomly.

Pair Corralation between Main Street and Christian Dior

Given the investment horizon of 90 days Main Street Capital is expected to generate 0.21 times more return on investment than Christian Dior. However, Main Street Capital is 4.84 times less risky than Christian Dior. It trades about 0.3 of its potential returns per unit of risk. Christian Dior SE is currently generating about -0.06 per unit of risk. If you would invest  4,857  in Main Street Capital on September 3, 2024 and sell it today you would earn a total of  690.00  from holding Main Street Capital or generate 14.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Main Street Capital  vs.  Christian Dior SE

Main Street Capital

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Street Capital are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Main Street displayed solid returns over the last few months and may actually be approaching a breakup point.

Christian Dior SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Christian Dior SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Main Street and Christian Dior

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

The idea behind Main Street Capital and Christian Dior SE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.