Correlation Between Brunello Cucinelli and Hermes International

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

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

Diversification Opportunities for Brunello Cucinelli and Hermes International

0.78

Correlation Coefficient

Brunello Cucinelli  Hermes International

Poor diversification

The 3 months correlation between Brunello and Hermes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Brunello Cucinelli SpA and Hermes International SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermes International SCA and Brunello Cucinelli 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 Brunello Cucinelli SpA are associated (or correlated) with Hermes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermes International SCA has no effect on the direction of Brunello Cucinelli i.e., Brunello Cucinelli and Hermes International go up and down completely randomly.

Pair Corralation between Brunello Cucinelli and Hermes International

Assuming the 90 days horizon Brunello Cucinelli is expected to generate 1.18 times less return on investment than Hermes International. In addition to that, Brunello Cucinelli is 1.45 times more volatile than Hermes International SCA. It trades about 0.02 of its total potential returns per unit of risk. Hermes International SCA is currently generating about 0.04 per unit of volatility. If you would invest  215,902  in Hermes International SCA on January 20, 2024 and sell it today you would earn a total of  34,978  from holding Hermes International SCA or generate 16.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Brunello Cucinelli SpA  vs.  Hermes International SCA

Brunello Cucinelli SpA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brunello Cucinelli SpA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Brunello Cucinelli showed solid returns over the last few months and may actually be approaching a breakup point.

Hermes International SCA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hermes International SCA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hermes International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunello Cucinelli and Hermes International

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

The idea behind Brunello Cucinelli SpA and Hermes International SCA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.