Correlation Between Reitmans and Lands End

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

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

Diversification Opportunities for Reitmans and Lands End

0.75

Correlation Coefficient

Reitmans  Lands End

Poor diversification

The 3 months correlation between Reitmans and Lands is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Reitmans Limited and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End and Reitmans 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 Reitmans Limited are associated (or correlated) with Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of Reitmans i.e., Reitmans and Lands End go up and down completely randomly.

Pair Corralation between Reitmans and Lands End

Assuming the 90 days horizon Reitmans Limited is expected to generate 1.07 times more return on investment than Lands End. However, Reitmans is 1.07 times more volatile than Lands End. It trades about -0.04 of its potential returns per unit of risk. Lands End is currently generating about -0.29 per unit of risk. If you would invest  183.00  in Reitmans Limited on October 12, 2024 and sell it today you would lose (5.00) from holding Reitmans Limited or give up 2.73% of portfolio value over 90 days.

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

Reitmans Limited  vs.  Lands End

Reitmans Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lands End

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lands End has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Reitmans and Lands End

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

The idea behind Reitmans Limited and Lands End 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.