Correlation Between RYU Apparel and Xcel Brands

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

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

Diversification Opportunities for RYU Apparel and Xcel Brands

0.64

Correlation Coefficient

RYU Apparel  Xcel Brands

Poor diversification

The 3 months correlation between RYU and Xcel is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding RYU Apparel and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Brands and RYU Apparel 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 RYU Apparel are associated (or correlated) with Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of RYU Apparel i.e., RYU Apparel and Xcel Brands go up and down completely randomly.

Pair Corralation between RYU Apparel and Xcel Brands

Assuming the 90 days horizon RYU Apparel is expected to under-perform the Xcel Brands. In addition to that, RYU Apparel is 3.29 times more volatile than Xcel Brands. It trades about -0.01 of its total potential returns per unit of risk. Xcel Brands is currently generating about 0.01 per unit of volatility. If you would invest  75.00  in Xcel Brands on October 11, 2024 and sell it today you would lose (28.00) from holding Xcel Brands or give up 37.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	11.11%
Values	Daily Returns

RYU Apparel  vs.  Xcel Brands

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.

Xcel Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xcel Brands 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 essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with RYU Apparel and Xcel Brands

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

The idea behind RYU Apparel and Xcel Brands 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.