Correlation Between Urban Outfitters and Fortune Minerals

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

By analyzing existing cross correlation between Urban Outfitters and Fortune Minerals Limited, you can compare the effects of market volatilities on Urban Outfitters and Fortune Minerals 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 Fortune Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Outfitters and Fortune Minerals.

Diversification Opportunities for Urban Outfitters and Fortune Minerals

0.15

Correlation Coefficient

Urban Outfitters  Fortune Minerals

Average diversification

The 3 months correlation between Urban and Fortune is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and Fortune Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Minerals 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 Fortune Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Minerals has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and Fortune Minerals go up and down completely randomly.

Pair Corralation between Urban Outfitters and Fortune Minerals

Assuming the 90 days horizon Urban Outfitters is expected to under-perform the Fortune Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Urban Outfitters is 7.76 times less risky than Fortune Minerals. The stock trades about -0.07 of its potential returns per unit of risk. The Fortune Minerals Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.85  in Fortune Minerals Limited on December 21, 2024 and sell it today you would earn a total of  0.30  from holding Fortune Minerals Limited or generate 16.22% return on investment over 90 days.

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

Urban Outfitters  vs.  Fortune Minerals Limited

Urban Outfitters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Urban Outfitters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Fortune Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Minerals Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortune Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Urban Outfitters and Fortune Minerals

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

The idea behind Urban Outfitters and Fortune Minerals Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.