Correlation Between URBAN OUTFITTERS and Compagnie

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

By analyzing existing cross correlation between URBAN OUTFITTERS and Compagnie de Saint Gobain, you can compare the effects of market volatilities on URBAN OUTFITTERS and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and Compagnie.

Diversification Opportunities for URBAN OUTFITTERS and Compagnie

0.26

Correlation Coefficient

URBAN OUTFITTERS  Compagnie

Modest diversification

The 3 months correlation between URBAN and Compagnie is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of URBAN OUTFITTERS i.e., URBAN OUTFITTERS and Compagnie go up and down completely randomly.

Pair Corralation between URBAN OUTFITTERS and Compagnie

Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 1.0 times less return on investment than Compagnie. In addition to that, URBAN OUTFITTERS is 2.0 times more volatile than Compagnie de Saint Gobain. It trades about 0.12 of its total potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.24 per unit of volatility. If you would invest  8,504  in Compagnie de Saint Gobain on October 27, 2024 and sell it today you would earn a total of  432.00  from holding Compagnie de Saint Gobain or generate 5.08% 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.  Compagnie de Saint Gobain

URBAN OUTFITTERS

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in URBAN OUTFITTERS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, URBAN OUTFITTERS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Compagnie de Saint

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental drivers, Compagnie may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with URBAN OUTFITTERS and Compagnie

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

The idea behind URBAN OUTFITTERS and Compagnie de Saint Gobain 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.