Correlation Between Express and Abercrombie Fitch

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

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

Diversification Opportunities for Express and Abercrombie Fitch

-0.04

Correlation Coefficient

Express  Abercrombie Fitch

Good diversification

The 3 months correlation between Express and Abercrombie is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Express and Abercrombie Fitch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abercrombie Fitch and Express 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 Express are associated (or correlated) with Abercrombie Fitch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abercrombie Fitch has no effect on the direction of Express i.e., Express and Abercrombie Fitch go up and down completely randomly.

Pair Corralation between Express and Abercrombie Fitch

If you would invest  14,007  in Abercrombie Fitch on October 10, 2024 and sell it today you would earn a total of  1,206  from holding Abercrombie Fitch or generate 8.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Express  vs.  Abercrombie Fitch

Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Express is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Abercrombie Fitch

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Abercrombie Fitch are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Abercrombie Fitch may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Express and Abercrombie Fitch

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

The idea behind Express and Abercrombie Fitch 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.