Correlation Between Charles Colvard and Fossil

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

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

Diversification Opportunities for Charles Colvard and Fossil

0.35

Correlation Coefficient

Charles Colvard  Fossil

Weak diversification

The 3 months correlation between Charles and Fossil is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Charles Colvard and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group and Charles Colvard 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 Charles Colvard 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 Charles Colvard i.e., Charles Colvard and Fossil go up and down completely randomly.

Pair Corralation between Charles Colvard and Fossil

Given the investment horizon of 90 days Charles Colvard is expected to under-perform the Fossil. In addition to that, Charles Colvard is 1.04 times more volatile than Fossil Group. It trades about -0.02 of its total potential returns per unit of risk. Fossil Group is currently generating about -0.01 per unit of volatility. If you would invest  94.00  in Fossil Group on February 4, 2024 and sell it today you would lose (4.00) from holding Fossil Group or give up 4.26% of portfolio value over 90 days.

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

Charles Colvard  vs.  Fossil Group

Charles Colvard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charles Colvard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Fossil Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fossil Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Charles Colvard and Fossil

The main advantage of trading using opposite Charles Colvard and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles Colvard 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 Charles Colvard 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.