Correlation Between Ralph Lauren and Unifi

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

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

Diversification Opportunities for Ralph Lauren and Unifi

-0.73

Correlation Coefficient

Ralph Lauren  Unifi

Pay attention - limited upside

The 3 months correlation between Ralph and Unifi is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ralph Lauren Corp and Unifi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifi Inc and Ralph Lauren 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 Ralph Lauren Corp are associated (or correlated) with Unifi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifi Inc has no effect on the direction of Ralph Lauren i.e., Ralph Lauren and Unifi go up and down completely randomly.

Pair Corralation between Ralph Lauren and Unifi

Allowing for the 90-day total investment horizon Ralph Lauren Corp is expected to generate 0.55 times more return on investment than Unifi. However, Ralph Lauren Corp is 1.82 times less risky than Unifi. It trades about 0.23 of its potential returns per unit of risk. Unifi Inc is currently generating about -0.07 per unit of risk. If you would invest  17,789  in Ralph Lauren Corp on September 13, 2024 and sell it today you would earn a total of  4,952  from holding Ralph Lauren Corp or generate 27.84% return on investment over 90 days.

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

Ralph Lauren Corp  vs.  Unifi Inc

Ralph Lauren Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Ralph Lauren disclosed solid returns over the last few months and may actually be approaching a breakup point.

Unifi Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unifi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ralph Lauren and Unifi

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

The idea behind Ralph Lauren Corp and Unifi 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.