Correlation Between Macys and Greenlane Holdings

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

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

Diversification Opportunities for Macys and Greenlane Holdings

-0.46

Correlation Coefficient

Macys  Greenlane Holdings

Very good diversification

The 3 months correlation between Macys and Greenlane is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Greenlane Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane 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 Greenlane Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Holdings has no effect on the direction of Macys i.e., Macys and Greenlane Holdings go up and down completely randomly.

Pair Corralation between Macys and Greenlane Holdings

Taking into account the 90-day investment horizon Macys Inc is expected to generate 0.52 times more return on investment than Greenlane Holdings. However, Macys Inc is 1.92 times less risky than Greenlane Holdings. It trades about 0.13 of its potential returns per unit of risk. Greenlane Holdings is currently generating about -0.19 per unit of risk. If you would invest  1,577  in Macys Inc on September 24, 2024 and sell it today you would earn a total of  88.00  from holding Macys Inc or generate 5.58% return on investment over 90 days.

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

Macys Inc  vs.  Greenlane Holdings

Macys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Greenlane Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Macys and Greenlane Holdings

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

The idea behind Macys Inc and Greenlane 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.