Correlation Between Macys and Sportsmans

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

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

Diversification Opportunities for Macys and Sportsmans

-0.11

Correlation Coefficient

Macys  Sportsmans

Good diversification

The 3 months correlation between Macys and Sportsmans is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans 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 Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of Macys i.e., Macys and Sportsmans go up and down completely randomly.

Pair Corralation between Macys and Sportsmans

Taking into account the 90-day investment horizon Macys is expected to generate 8.76 times less return on investment than Sportsmans. But when comparing it to its historical volatility, Macys Inc is 1.73 times less risky than Sportsmans. It trades about 0.01 of its potential returns per unit of risk. Sportsmans is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  223.00  in Sportsmans on September 29, 2024 and sell it today you would earn a total of  42.00  from holding Sportsmans or generate 18.83% 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.  Sportsmans

Macys Inc

Risk-Adjusted Performance

7 of 100

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.

Sportsmans

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Macys and Sportsmans

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

The idea behind Macys Inc and Sportsmans 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.