Correlation Between Ralph Lauren and Sturm Ruger

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

By analyzing existing cross correlation between Ralph Lauren Corp and Sturm Ruger, you can compare the effects of market volatilities on Ralph Lauren and Sturm Ruger 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 Ralph Lauren with a short position of Sturm Ruger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ralph Lauren and Sturm Ruger.

Diversification Opportunities for Ralph Lauren and Sturm Ruger

-0.46

Correlation Coefficient

Ralph Lauren  Sturm Ruger

Very good diversification

The 3 months correlation between Ralph and Sturm is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Sturm Ruger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sturm Ruger and Ralph Lauren 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 Ralph Lauren Corp are associated (or correlated) with Sturm Ruger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sturm Ruger has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Sturm Ruger go up and down completely randomly.

Pair Corralation between Ralph Lauren and Sturm Ruger

Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 1.36 times more return on investment than Sturm Ruger. However, Ralph Lauren is 1.36 times more volatile than Sturm Ruger. It trades about 0.18 of its potential returns per unit of risk. Sturm Ruger is currently generating about -0.2 per unit of risk. If you would invest  20,303  in Ralph Lauren Corp on August 27, 2024 and sell it today you would earn a total of  1,697  from holding Ralph Lauren Corp or generate 8.36% return on investment over 90 days.

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

Ralph Lauren Corp  vs.  Sturm Ruger

Ralph Lauren Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Ralph Lauren disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sturm Ruger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sturm Ruger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Ralph Lauren and Sturm Ruger

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

The idea behind Ralph Lauren Corp and Sturm Ruger 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.