Correlation Between Macys and Warby Parker

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

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

Diversification Opportunities for Macys and Warby Parker

0.58

Correlation Coefficient

Macys  Warby Parker

Very weak diversification

The 3 months correlation between Macys and Warby is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Warby Parker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warby Parker 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 Warby Parker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warby Parker has no effect on the direction of Macys i.e., Macys and Warby Parker go up and down completely randomly.

Pair Corralation between Macys and Warby Parker

Taking into account the 90-day investment horizon Macys Inc is expected to generate 0.89 times more return on investment than Warby Parker. However, Macys Inc is 1.13 times less risky than Warby Parker. It trades about 0.16 of its potential returns per unit of risk. Warby Parker is currently generating about 0.14 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	Weak
Accuracy	100.0%
Values	Daily Returns

Macys Inc  vs.  Warby Parker

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.

Warby Parker

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Warby Parker are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Warby Parker showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macys and Warby Parker

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

The idea behind Macys Inc and Warby Parker 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.