Correlation Between Oxford Industries and RYU Apparel

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

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

Diversification Opportunities for Oxford Industries and RYU Apparel

-0.46

Correlation Coefficient

Oxford Industries  RYU Apparel

Very good diversification

The 3 months correlation between Oxford and RYU is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Industries and RYU Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYU Apparel and Oxford Industries 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 Oxford Industries are associated (or correlated) with RYU Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYU Apparel has no effect on the direction of Oxford Industries i.e., Oxford Industries and RYU Apparel go up and down completely randomly.

Pair Corralation between Oxford Industries and RYU Apparel

Considering the 90-day investment horizon Oxford Industries is expected to generate 0.11 times more return on investment than RYU Apparel. However, Oxford Industries is 9.02 times less risky than RYU Apparel. It trades about -0.01 of its potential returns per unit of risk. RYU Apparel is currently generating about -0.01 per unit of risk. If you would invest  10,423  in Oxford Industries on October 11, 2024 and sell it today you would lose (1,766) from holding Oxford Industries or give up 16.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	11.11%
Values	Daily Returns

Oxford Industries  vs.  RYU Apparel

Oxford Industries

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Industries are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Oxford Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

RYU Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RYU Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RYU Apparel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Oxford Industries and RYU Apparel

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

The idea behind Oxford Industries and RYU Apparel 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.