Correlation Between 615369AW5 and Coty

Can any of the company-specific risk be diversified away by investing in both 615369AW5 and Coty 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 615369AW5 and Coty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MCO 2 19 AUG 31 and Coty Inc, you can compare the effects of market volatilities on 615369AW5 and Coty 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 615369AW5 with a short position of Coty. Check out your portfolio center. Please also check ongoing floating volatility patterns of 615369AW5 and Coty.

Diversification Opportunities for 615369AW5 and Coty

0.66

Correlation Coefficient

615369AW5  Coty

Poor diversification

The 3 months correlation between 615369AW5 and Coty is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MCO 2 19 AUG 31 and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc and 615369AW5 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 MCO 2 19 AUG 31 are associated (or correlated) with Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of 615369AW5 i.e., 615369AW5 and Coty go up and down completely randomly.

Pair Corralation between 615369AW5 and Coty

Assuming the 90 days trading horizon MCO 2 19 AUG 31 is expected to under-perform the Coty. But the bond apears to be less risky and, when comparing its historical volatility, MCO 2 19 AUG 31 is 2.39 times less risky than Coty. The bond trades about -0.13 of its potential returns per unit of risk. The Coty Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  747.00  in Coty Inc on September 13, 2024 and sell it today you would earn a total of  7.00  from holding Coty Inc or generate 0.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

MCO 2 19 AUG 31  vs.  Coty Inc

615369AW5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCO 2 19 AUG 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 615369AW5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with 615369AW5 and Coty

The main advantage of trading using opposite 615369AW5 and Coty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 615369AW5 position performs unexpectedly, Coty 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 Coty will offset losses from the drop in Coty's long position.

The idea behind MCO 2 19 AUG 31 and Coty Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.