Correlation Between Ermenegildo Zegna and Vince Holding

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

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

Diversification Opportunities for Ermenegildo Zegna and Vince Holding

-0.39

Correlation Coefficient

Ermenegildo Zegna  Vince Holding

Very good diversification

The 3 months correlation between Ermenegildo and Vince is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ermenegildo Zegna NV and Vince Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vince Holding Corp and Ermenegildo Zegna 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 Ermenegildo Zegna NV are associated (or correlated) with Vince Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vince Holding Corp has no effect on the direction of Ermenegildo Zegna i.e., Ermenegildo Zegna and Vince Holding go up and down completely randomly.

Pair Corralation between Ermenegildo Zegna and Vince Holding

Considering the 90-day investment horizon Ermenegildo Zegna NV is expected to under-perform the Vince Holding. But the stock apears to be less risky and, when comparing its historical volatility, Ermenegildo Zegna NV is 1.64 times less risky than Vince Holding. The stock trades about -0.2 of its potential returns per unit of risk. The Vince Holding Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  189.00  in Vince Holding Corp on August 14, 2024 and sell it today you would lose (4.00) from holding Vince Holding Corp or give up 2.12% of portfolio value over 90 days.

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

Ermenegildo Zegna NV  vs.  Vince Holding Corp

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 unsteady 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.

Vince Holding Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vince Holding Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Vince Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ermenegildo Zegna and Vince Holding

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

The idea behind Ermenegildo Zegna NV and Vince Holding Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.