Correlation Between Buckle and T.J. Maxx

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

By analyzing existing cross correlation between Buckle Inc and The TJX Companies, you can compare the effects of market volatilities on Buckle and T.J. Maxx 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 Buckle with a short position of T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buckle and T.J. Maxx.

Diversification Opportunities for Buckle and T.J. Maxx

0.93

Correlation Coefficient

Buckle  T.J. Maxx

Almost no diversification

The 3 months correlation between Buckle and T.J. is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Buckle Inc and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies and Buckle 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 Buckle Inc are associated (or correlated) with T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Buckle i.e., Buckle and T.J. Maxx go up and down completely randomly.

Pair Corralation between Buckle and T.J. Maxx

Considering the 90-day investment horizon Buckle Inc is expected to generate 1.88 times more return on investment than T.J. Maxx. However, Buckle is 1.88 times more volatile than The TJX Companies. It trades about 0.14 of its potential returns per unit of risk. The TJX Companies is currently generating about 0.08 per unit of risk. If you would invest  3,630  in Buckle Inc on September 26, 2024 and sell it today you would earn a total of  1,496  from holding Buckle Inc or generate 41.21% return on investment over 90 days.

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

Buckle Inc  vs.  The TJX Companies

Buckle Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Buckle Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Buckle exhibited solid returns over the last few months and may actually be approaching a breakup point.

TJX Companies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The TJX Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking indicators, T.J. Maxx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Buckle and T.J. Maxx

The main advantage of trading using opposite Buckle and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buckle position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.

The idea behind Buckle Inc and The TJX Companies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.