Correlation Between Aritzia and Guess

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

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

Diversification Opportunities for Aritzia and Guess

0.21

Correlation Coefficient

Aritzia  Guess

Modest diversification

The 3 months correlation between Aritzia and Guess is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aritzia and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc and Aritzia 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 Aritzia are associated (or correlated) with Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Aritzia i.e., Aritzia and Guess go up and down completely randomly.

Pair Corralation between Aritzia and Guess

Assuming the 90 days horizon Aritzia is expected to generate 1.41 times more return on investment than Guess. However, Aritzia is 1.41 times more volatile than Guess Inc. It trades about 0.08 of its potential returns per unit of risk. Guess Inc is currently generating about -0.04 per unit of risk. If you would invest  2,105  in Aritzia on September 24, 2024 and sell it today you would earn a total of  1,660  from holding Aritzia or generate 78.86% return on investment over 90 days.

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

Aritzia  vs.  Guess Inc

Aritzia

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aritzia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Guess Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guess Inc 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aritzia and Guess

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

The idea behind Aritzia and Guess Inc 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.