Correlation Between Urban Outfitters and Lery Seafood

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

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

Diversification Opportunities for Urban Outfitters and Lery Seafood

-0.11

Correlation Coefficient

Urban Outfitters  Lery Seafood

Good diversification

The 3 months correlation between Urban and Lery is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group 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 Lery Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and Lery Seafood go up and down completely randomly.

Pair Corralation between Urban Outfitters and Lery Seafood

Assuming the 90 days horizon Urban Outfitters is expected to generate 2.6 times less return on investment than Lery Seafood. But when comparing it to its historical volatility, Urban Outfitters is 3.26 times less risky than Lery Seafood. It trades about 0.08 of its potential returns per unit of risk. Lery Seafood Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Lery Seafood Group on October 10, 2024 and sell it today you would earn a total of  327.00  from holding Lery Seafood Group or generate 359.34% return on investment over 90 days.

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

Urban Outfitters  vs.  Lery Seafood Group

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.

Lery Seafood Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lery Seafood Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lery Seafood is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Urban Outfitters and Lery Seafood

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

The idea behind Urban Outfitters and Lery Seafood Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.