Correlation Between Lowes Companies and Tillys

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

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

Diversification Opportunities for Lowes Companies and Tillys

0.7

Correlation Coefficient

Lowes Companies  Tillys

Poor diversification

The 3 months correlation between Lowes and Tillys is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys Inc and Lowes Companies 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 Lowes Companies are associated (or correlated) with Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Lowes Companies i.e., Lowes Companies and Tillys go up and down completely randomly.

Pair Corralation between Lowes Companies and Tillys

Considering the 90-day investment horizon Lowes Companies is expected to generate 0.34 times more return on investment than Tillys. However, Lowes Companies is 2.95 times less risky than Tillys. It trades about -0.06 of its potential returns per unit of risk. Tillys Inc is currently generating about -0.2 per unit of risk. If you would invest  24,566  in Lowes Companies on December 28, 2024 and sell it today you would lose (1,349) from holding Lowes Companies or give up 5.49% of portfolio value over 90 days.

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

Lowes Companies  vs.  Tillys Inc

Lowes Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lowes Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lowes Companies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tillys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tillys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lowes Companies and Tillys

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

The idea behind Lowes Companies and Tillys 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..