Correlation Between Macys and ATRenew
Can any of the company-specific risk be diversified away by investing in both Macys and ATRenew 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 ATRenew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and ATRenew Inc DRC, you can compare the effects of market volatilities on Macys and ATRenew 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 ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and ATRenew.
Diversification Opportunities for Macys and ATRenew
Very good diversification
The 3 months correlation between Macys and ATRenew is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC 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 ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of Macys i.e., Macys and ATRenew go up and down completely randomly.
Pair Corralation between Macys and ATRenew
Taking into account the 90-day investment horizon Macys Inc is expected to under-perform the ATRenew. But the stock apears to be less risky and, when comparing its historical volatility, Macys Inc is 1.68 times less risky than ATRenew. The stock trades about -0.17 of its potential returns per unit of risk. The ATRenew Inc DRC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 281.00 in ATRenew Inc DRC on December 26, 2024 and sell it today you would earn a total of 34.00 from holding ATRenew Inc DRC or generate 12.1% 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. ATRenew Inc DRC
Performance |
Timeline |
Macys Inc |
ATRenew Inc DRC |
Macys and ATRenew Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macys and ATRenew
The main advantage of trading using opposite Macys and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, ATRenew 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 ATRenew will offset losses from the drop in ATRenew's long position.The idea behind Macys Inc and ATRenew Inc DRC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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