Correlation Between VF and Fossil

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

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

Diversification Opportunities for VF and Fossil

0.73

Correlation Coefficient

VF  Fossil

Poor diversification

The 3 months correlation between VF and Fossil is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group and VF 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 VF Corporation are associated (or correlated) with Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of VF i.e., VF and Fossil go up and down completely randomly.

Pair Corralation between VF and Fossil

Considering the 90-day investment horizon VF is expected to generate 2.52 times less return on investment than Fossil. But when comparing it to its historical volatility, VF Corporation is 1.01 times less risky than Fossil. It trades about 0.05 of its potential returns per unit of risk. Fossil Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  111.00  in Fossil Group on August 31, 2024 and sell it today you would earn a total of  38.00  from holding Fossil Group or generate 34.23% return on investment over 90 days.

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

VF Corp.  vs.  Fossil Group

VF Corporation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, VF exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fossil Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fossil Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Fossil disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VF and Fossil

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

The idea behind VF Corporation and Fossil Group 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.