Correlation Between Macys and J Long

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

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

Diversification Opportunities for Macys and J Long

-0.39

Correlation Coefficient

Macys  J Long

Very good diversification

The 3 months correlation between Macys and J Long is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and J Long Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Long Group 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 J Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Long Group has no effect on the direction of Macys i.e., Macys and J Long go up and down completely randomly.

Pair Corralation between Macys and J Long

Taking into account the 90-day investment horizon Macys is expected to generate 21.96 times less return on investment than J Long. But when comparing it to its historical volatility, Macys Inc is 3.2 times less risky than J Long. It trades about 0.03 of its potential returns per unit of risk. J Long Group Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  248.00  in J Long Group Limited on September 23, 2024 and sell it today you would earn a total of  55.00  from holding J Long Group Limited or generate 22.18% return on investment over 90 days.

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

Macys Inc  vs.  J Long Group Limited

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

J Long Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J Long Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, J Long may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Macys and J Long

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

The idea behind Macys Inc and J Long Group Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.