Correlation Between Sea and Macys

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

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

Diversification Opportunities for Sea and Macys

0.58

Correlation Coefficient

Sea  Macys

Very weak diversification

The 3 months correlation between Sea and Macys is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and Sea 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 Sea 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 Sea i.e., Sea and Macys go up and down completely randomly.

Pair Corralation between Sea and Macys

Allowing for the 90-day total investment horizon Sea is expected to under-perform the Macys. But the stock apears to be less risky and, when comparing its historical volatility, Sea is 1.21 times less risky than Macys. The stock trades about -0.05 of its potential returns per unit of risk. The Macys Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,613  in Macys Inc on September 23, 2024 and sell it today you would earn a total of  11.00  from holding Macys Inc or generate 0.68% return on investment over 90 days.

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

Sea  vs.  Macys Inc

Sea

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sea and Macys

The main advantage of trading using opposite Sea and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea 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 Sea 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.