Correlation Between T.J. Maxx and Buckle

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

By analyzing existing cross correlation between The TJX Companies and Buckle Inc, you can compare the effects of market volatilities on T.J. Maxx and Buckle 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 T.J. Maxx with a short position of Buckle. Check out your portfolio center. Please also check ongoing floating volatility patterns of T.J. Maxx and Buckle.

Diversification Opportunities for T.J. Maxx and Buckle

0.96

Correlation Coefficient

T.J. Maxx  Buckle

Almost no diversification

The 3 months correlation between T.J. and Buckle is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding The TJX Companies and Buckle Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc and T.J. Maxx 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 The TJX Companies are associated (or correlated) with Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of T.J. Maxx i.e., T.J. Maxx and Buckle go up and down completely randomly.

Pair Corralation between T.J. Maxx and Buckle

Considering the 90-day investment horizon T.J. Maxx is expected to generate 3.57 times less return on investment than Buckle. But when comparing it to its historical volatility, The TJX Companies is 1.88 times less risky than Buckle. It trades about 0.08 of its potential returns per unit of risk. Buckle Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4,308  in Buckle Inc on October 14, 2024 and sell it today you would earn a total of  736.00  from holding Buckle Inc or generate 17.08% return on investment over 90 days.

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

The TJX Companies  vs.  Buckle Inc

TJX Companies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The TJX Companies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking indicators, T.J. Maxx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Buckle Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Buckle Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, Buckle exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with T.J. Maxx and Buckle

The main advantage of trading using opposite T.J. Maxx and Buckle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T.J. Maxx position performs unexpectedly, Buckle 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 Buckle will offset losses from the drop in Buckle's long position.

The idea behind The TJX Companies and Buckle 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.