Correlation Between AMCON Distributing and Macys

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

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

Diversification Opportunities for AMCON Distributing and Macys

0.26

Correlation Coefficient

AMCON Distributing  Macys

Modest diversification

The 3 months correlation between AMCON and Macys is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Macys go up and down completely randomly.

Pair Corralation between AMCON Distributing and Macys

Considering the 90-day investment horizon AMCON Distributing is expected to generate 1.49 times more return on investment than Macys. However, AMCON Distributing is 1.49 times more volatile than Macys Inc. It trades about 0.11 of its potential returns per unit of risk. Macys Inc is currently generating about 0.14 per unit of risk. If you would invest  12,795  in AMCON Distributing on September 25, 2024 and sell it today you would earn a total of  805.00  from holding AMCON Distributing or generate 6.29% return on investment over 90 days.

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

AMCON Distributing  vs.  Macys Inc

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Macys Inc

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMCON Distributing and Macys

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

The idea behind AMCON Distributing and Macys 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.