Correlation Between Envela Corp and Macys

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

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

Diversification Opportunities for Envela Corp and Macys

0.65

Correlation Coefficient

Envela Corp  Macys

Poor diversification

The 3 months correlation between Envela and Macys is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Envela Corp and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and Envela Corp 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 Envela Corp 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 Envela Corp i.e., Envela Corp and Macys go up and down completely randomly.

Pair Corralation between Envela Corp and Macys

Considering the 90-day investment horizon Envela Corp is expected to generate 1.64 times more return on investment than Macys. However, Envela Corp is 1.64 times more volatile than Macys Inc. It trades about 0.15 of its potential returns per unit of risk. Macys Inc is currently generating about 0.16 per unit of risk. If you would invest  659.00  in Envela Corp on September 27, 2024 and sell it today you would earn a total of  68.00  from holding Envela Corp or generate 10.32% return on investment over 90 days.

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

Envela Corp  vs.  Macys Inc

Envela Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Envela Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Envela Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Macys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Envela Corp and Macys

The main advantage of trading using opposite Envela Corp and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envela Corp 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 Envela Corp 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.