Correlation Between Salvatore Ferragamo and Prada Spa

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

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

Diversification Opportunities for Salvatore Ferragamo and Prada Spa

-0.09

Correlation Coefficient

Salvatore Ferragamo  Prada Spa

Good diversification

The 3 months correlation between Salvatore and Prada is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Salvatore Ferragamo SpA and Prada Spa PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prada Spa PK and Salvatore Ferragamo 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 Salvatore Ferragamo SpA are associated (or correlated) with Prada Spa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prada Spa PK has no effect on the direction of Salvatore Ferragamo i.e., Salvatore Ferragamo and Prada Spa go up and down completely randomly.

Pair Corralation between Salvatore Ferragamo and Prada Spa

Assuming the 90 days horizon Salvatore Ferragamo SpA is expected to under-perform the Prada Spa. In addition to that, Salvatore Ferragamo is 1.14 times more volatile than Prada Spa PK. It trades about -0.06 of its total potential returns per unit of risk. Prada Spa PK is currently generating about 0.07 per unit of volatility. If you would invest  1,135  in Prada Spa PK on September 12, 2024 and sell it today you would earn a total of  481.00  from holding Prada Spa PK or generate 42.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.98%
Values	Daily Returns

Salvatore Ferragamo SpA  vs.  Prada Spa PK

Salvatore Ferragamo SpA

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Salvatore Ferragamo SpA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Salvatore Ferragamo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prada Spa PK

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prada Spa PK are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Prada Spa showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salvatore Ferragamo and Prada Spa

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

The idea behind Salvatore Ferragamo SpA and Prada Spa PK 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.