Correlation Between ODP Corp and Macys

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

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

Diversification Opportunities for ODP Corp and Macys

-0.54

Correlation Coefficient

ODP Corp  Macys

Excellent diversification

The 3 months correlation between ODP and Macys is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ODP Corp and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and ODP Corp 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 ODP Corp are associated (or correlated) with Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of ODP Corp i.e., ODP Corp and Macys go up and down completely randomly.

Pair Corralation between ODP Corp and Macys

Considering the 90-day investment horizon ODP Corp is expected to under-perform the Macys. But the stock apears to be less risky and, when comparing its historical volatility, ODP Corp is 1.06 times less risky than Macys. The stock trades about -0.04 of its potential returns per unit of risk. The Macys Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,119  in Macys Inc on October 4, 2024 and sell it today you would lose (426.00) from holding Macys Inc or give up 20.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ODP Corp  vs.  Macys Inc

ODP Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ODP Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Macys Inc

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ODP Corp and Macys

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

The idea behind ODP Corp and Macys Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.