Correlation Between Macys and Luminar Technologies

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

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

Diversification Opportunities for Macys and Luminar Technologies

0.35

Correlation Coefficient

Macys  Luminar Technologies

Weak diversification

The 3 months correlation between Macys and Luminar is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies 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 Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Macys i.e., Macys and Luminar Technologies go up and down completely randomly.

Pair Corralation between Macys and Luminar Technologies

Taking into account the 90-day investment horizon Macys Inc is expected to under-perform the Luminar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Macys Inc is 3.22 times less risky than Luminar Technologies. The stock trades about -0.07 of its potential returns per unit of risk. The Luminar Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  549.00  in Luminar Technologies on December 19, 2024 and sell it today you would earn a total of  134.00  from holding Luminar Technologies or generate 24.41% 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.  Luminar Technologies

Macys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macys Inc 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 primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Luminar Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Luminar Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Luminar Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macys and Luminar Technologies

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

The idea behind Macys Inc and Luminar Technologies 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.