Correlation Between Macys and Evgo

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Can any of the company-specific risk be diversified away by investing in both Macys and Evgo 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 Evgo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and Evgo Inc, you can compare the effects of market volatilities on Macys and Evgo 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 Evgo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and Evgo.

Diversification Opportunities for Macys and Evgo

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Macys and Evgo is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Evgo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evgo Inc 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 Evgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evgo Inc has no effect on the direction of Macys i.e., Macys and Evgo go up and down completely randomly.

Pair Corralation between Macys and Evgo

Taking into account the 90-day investment horizon Macys is expected to generate 6.33 times less return on investment than Evgo. But when comparing it to its historical volatility, Macys Inc is 2.04 times less risky than Evgo. It trades about 0.01 of its potential returns per unit of risk. Evgo Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  387.00  in Evgo Inc on September 29, 2024 and sell it today you would earn a total of  33.00  from holding Evgo Inc or generate 8.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Macys Inc  vs.  Evgo Inc

 Performance 
       Timeline  
Macys Inc 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys displayed solid returns over the last few months and may actually be approaching a breakup point.
Evgo Inc 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Evgo Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Evgo displayed solid returns over the last few months and may actually be approaching a breakup point.

Macys and Evgo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Macys and Evgo

The main advantage of trading using opposite Macys and Evgo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, Evgo 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 Evgo will offset losses from the drop in Evgo's long position.
The idea behind Macys Inc and Evgo 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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