Correlation Between Oxford Industries and Ermenegildo Zegna

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

By analyzing existing cross correlation between Oxford Industries and Ermenegildo Zegna NV, you can compare the effects of market volatilities on Oxford Industries and Ermenegildo Zegna 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 Oxford Industries with a short position of Ermenegildo Zegna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Industries and Ermenegildo Zegna.

Diversification Opportunities for Oxford Industries and Ermenegildo Zegna

0.66

Correlation Coefficient

Oxford Industries  Ermenegildo Zegna

Poor diversification

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

Pair Corralation between Oxford Industries and Ermenegildo Zegna

Considering the 90-day investment horizon Oxford Industries is expected to generate 0.79 times more return on investment than Ermenegildo Zegna. However, Oxford Industries is 1.27 times less risky than Ermenegildo Zegna. It trades about 0.29 of its potential returns per unit of risk. Ermenegildo Zegna NV is currently generating about 0.03 per unit of risk. If you would invest  7,408  in Oxford Industries on August 31, 2024 and sell it today you would earn a total of  997.50  from holding Oxford Industries or generate 13.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Oxford Industries  vs.  Ermenegildo Zegna NV

Oxford Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Oxford Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ermenegildo Zegna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ermenegildo Zegna NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Oxford Industries and Ermenegildo Zegna

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

The idea behind Oxford Industries and Ermenegildo Zegna NV 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.