Correlation Between Under Armour and Oxford Industries

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

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

Diversification Opportunities for Under Armour and Oxford Industries

0.2

Correlation Coefficient

Under Armour  Oxford Industries

Modest diversification

The 3 months correlation between Under and Oxford is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Oxford Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Industries and Under Armour 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 Under Armour C are associated (or correlated) with Oxford Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Industries has no effect on the direction of Under Armour i.e., Under Armour and Oxford Industries go up and down completely randomly.

Pair Corralation between Under Armour and Oxford Industries

Allowing for the 90-day total investment horizon Under Armour C is expected to under-perform the Oxford Industries. In addition to that, Under Armour is 1.33 times more volatile than Oxford Industries. It trades about -0.01 of its total potential returns per unit of risk. Oxford Industries is currently generating about -0.01 per unit of volatility. If you would invest  10,111  in Oxford Industries on October 8, 2024 and sell it today you would lose (2,090) from holding Oxford Industries or give up 20.67% of portfolio value over 90 days.

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

Under Armour C  vs.  Oxford Industries

Under Armour C

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Under Armour C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Under Armour is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Oxford Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Oxford Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Under Armour and Oxford Industries

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

The idea behind Under Armour C and Oxford Industries 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.