Correlation Between Urban Outfitters and Packagingof America

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

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

Diversification Opportunities for Urban Outfitters and Packagingof America

0.2

Correlation Coefficient

Urban Outfitters  Packagingof America

Modest diversification

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

Pair Corralation between Urban Outfitters and Packagingof America

Assuming the 90 days horizon Urban Outfitters is expected to generate 1.04 times less return on investment than Packagingof America. In addition to that, Urban Outfitters is 1.92 times more volatile than Packaging of. It trades about 0.07 of its total potential returns per unit of risk. Packaging of is currently generating about 0.14 per unit of volatility. If you would invest  11,516  in Packaging of on October 23, 2024 and sell it today you would earn a total of  11,234  from holding Packaging of or generate 97.55% return on investment over 90 days.

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

Urban Outfitters  vs.  Packaging of

Urban Outfitters

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Outfitters are ranked lower than 24 (%) 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.

Packagingof America

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Packagingof America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Urban Outfitters and Packagingof America

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

The idea behind Urban Outfitters and Packaging of 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.