Correlation Between VF and Tapestry

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

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

Diversification Opportunities for VF and Tapestry

0.06

Correlation Coefficient

VF  Tapestry

Significant diversification

The 3 months correlation between VF and Tapestry is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry 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 Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of VF i.e., VF and Tapestry go up and down completely randomly.

Pair Corralation between VF and Tapestry

Considering the 90-day investment horizon VF is expected to generate 5.86 times less return on investment than Tapestry. In addition to that, VF is 1.91 times more volatile than Tapestry. It trades about 0.03 of its total potential returns per unit of risk. Tapestry is currently generating about 0.34 per unit of volatility. If you would invest  7,018  in Tapestry on May 1, 2025 and sell it today you would earn a total of  3,722  from holding Tapestry or generate 53.04% return on investment over 90 days.

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

VF Corp.  vs.  Tapestry

VF Corporation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, VF may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Tapestry

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VF and Tapestry

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

The idea behind VF Corporation and Tapestry 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.