Correlation Between Urban Outfitters and GWILLI FOOD

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

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

Diversification Opportunities for Urban Outfitters and GWILLI FOOD

0.94

Correlation Coefficient

Urban Outfitters  GWILLI FOOD

Almost no diversification

The 3 months correlation between Urban and GWILLI is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD and Urban Outfitters 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 Urban Outfitters are associated (or correlated) with GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and GWILLI FOOD go up and down completely randomly.

Pair Corralation between Urban Outfitters and GWILLI FOOD

Assuming the 90 days horizon Urban Outfitters is expected to generate 0.87 times more return on investment than GWILLI FOOD. However, Urban Outfitters is 1.15 times less risky than GWILLI FOOD. It trades about 0.08 of its potential returns per unit of risk. GWILLI FOOD is currently generating about 0.03 per unit of risk. If you would invest  2,493  in Urban Outfitters on October 10, 2024 and sell it today you would earn a total of  3,107  from holding Urban Outfitters or generate 124.63% return on investment over 90 days.

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

Urban Outfitters  vs.  GWILLI FOOD

Urban Outfitters

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Outfitters are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Urban Outfitters reported solid returns over the last few months and may actually be approaching a breakup point.

GWILLI FOOD

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Urban Outfitters and GWILLI FOOD

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

The idea behind Urban Outfitters and GWILLI FOOD 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..