Correlation Between Kontoor Brands and Oxford Industries

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

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

Diversification Opportunities for Kontoor Brands and Oxford Industries

0.78

Correlation Coefficient

Kontoor Brands  Oxford Industries

Poor diversification

The 3 months correlation between Kontoor and Oxford is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Oxford Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Industries and Kontoor Brands 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 Kontoor Brands are associated (or correlated) with Oxford Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Industries has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and Oxford Industries go up and down completely randomly.

Pair Corralation between Kontoor Brands and Oxford Industries

Considering the 90-day investment horizon Kontoor Brands is expected to under-perform the Oxford Industries. In addition to that, Kontoor Brands is 1.04 times more volatile than Oxford Industries. It trades about -0.15 of its total potential returns per unit of risk. Oxford Industries is currently generating about -0.13 per unit of volatility. If you would invest  7,550  in Oxford Industries on December 28, 2024 and sell it today you would lose (1,654) from holding Oxford Industries or give up 21.91% of portfolio value over 90 days.

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

Kontoor Brands  vs.  Oxford Industries

Kontoor Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kontoor Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Oxford Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oxford Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Kontoor Brands and Oxford Industries

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

The idea behind Kontoor Brands and Oxford Industries 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 Transaction History module to view history of all your transactions and understand their impact on performance.