Correlation Between Movado and Gap,

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

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

Diversification Opportunities for Movado and Gap,

0.52

Correlation Coefficient

Movado  Gap,

Very weak diversification

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

Pair Corralation between Movado and Gap,

Considering the 90-day investment horizon Movado Group is expected to under-perform the Gap,. But the stock apears to be less risky and, when comparing its historical volatility, Movado Group is 1.06 times less risky than Gap,. The stock trades about -0.07 of its potential returns per unit of risk. The The Gap, is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,227  in The Gap, on August 30, 2024 and sell it today you would earn a total of  195.00  from holding The Gap, or generate 8.76% return on investment over 90 days.

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

Movado Group  vs.  The Gap,

Movado Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Movado Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Gap,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Gap, may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Movado and Gap,

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

The idea behind Movado Group and The Gap, 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.