Correlation Between Macys and Boot Barn

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

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

Diversification Opportunities for Macys and Boot Barn

0.34

Correlation Coefficient

Macys  Boot Barn

Weak diversification

The 3 months correlation between Macys and Boot is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Boot Barn Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boot Barn Holdings and Macys 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 Macys Inc are associated (or correlated) with Boot Barn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boot Barn Holdings has no effect on the direction of Macys i.e., Macys and Boot Barn go up and down completely randomly.

Pair Corralation between Macys and Boot Barn

Taking into account the 90-day investment horizon Macys Inc is expected to under-perform the Boot Barn. In addition to that, Macys is 1.05 times more volatile than Boot Barn Holdings. It trades about -0.01 of its total potential returns per unit of risk. Boot Barn Holdings is currently generating about 0.06 per unit of volatility. If you would invest  7,675  in Boot Barn Holdings on October 13, 2024 and sell it today you would earn a total of  7,939  from holding Boot Barn Holdings or generate 103.44% return on investment over 90 days.

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

Macys Inc  vs.  Boot Barn Holdings

Macys Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Macys is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Boot Barn Holdings

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Macys and Boot Barn

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

The idea behind Macys Inc and Boot Barn Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.