Correlation Between Macys and Pet Acquisition

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

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

Diversification Opportunities for Macys and Pet Acquisition

0.05

Correlation Coefficient

Macys  Pet Acquisition

Significant diversification

The 3 months correlation between Macys and Pet is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Pet Acquisition LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Acquisition LLC 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 Pet Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Acquisition LLC has no effect on the direction of Macys i.e., Macys and Pet Acquisition go up and down completely randomly.

Pair Corralation between Macys and Pet Acquisition

Taking into account the 90-day investment horizon Macys Inc is expected to generate 0.34 times more return on investment than Pet Acquisition. However, Macys Inc is 2.92 times less risky than Pet Acquisition. It trades about 0.16 of its potential returns per unit of risk. Pet Acquisition LLC is currently generating about 0.02 per unit of risk. If you would invest  1,572  in Macys Inc on September 27, 2024 and sell it today you would earn a total of  110.00  from holding Macys Inc or generate 7.0% return on investment over 90 days.

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

Macys Inc  vs.  Pet Acquisition LLC

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 unsteady primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pet Acquisition LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pet Acquisition LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Macys and Pet Acquisition

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

The idea behind Macys Inc and Pet Acquisition LLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.