Correlation Between Ralph Lauren and Moncler SpA

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

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

Diversification Opportunities for Ralph Lauren and Moncler SpA

-0.48

Correlation Coefficient

Ralph Lauren  Moncler SpA

Very good diversification

The 3 months correlation between Ralph and Moncler is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren and Moncler SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moncler SpA and Ralph Lauren 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 Ralph Lauren 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 Ralph Lauren i.e., Ralph Lauren and Moncler SpA go up and down completely randomly.

Pair Corralation between Ralph Lauren and Moncler SpA

Assuming the 90 days horizon Ralph Lauren is expected to generate 0.87 times more return on investment than Moncler SpA. However, Ralph Lauren is 1.15 times less risky than Moncler SpA. It trades about 0.2 of its potential returns per unit of risk. Moncler SpA is currently generating about 0.03 per unit of risk. If you would invest  16,426  in Ralph Lauren on September 22, 2024 and sell it today you would earn a total of  4,684  from holding Ralph Lauren or generate 28.52% return on investment over 90 days.

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

Ralph Lauren  vs.  Moncler SpA

Ralph Lauren

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ralph Lauren reported solid returns over the last few months and may actually be approaching a breakup point.

Moncler SpA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moncler SpA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Moncler SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ralph Lauren and Moncler SpA

The main advantage of trading using opposite Ralph Lauren and Moncler SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ralph Lauren 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 Ralph Lauren 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.