Correlation Between Urban Outfitters and ABC MartInc

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

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

Diversification Opportunities for Urban Outfitters and ABC MartInc

0.0

Correlation Coefficient

Urban Outfitters  ABC MartInc

Pay attention - limited upside

The 3 months correlation between Urban and ABC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and ABC MartInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC MartInc 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 ABC MartInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC MartInc has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and ABC MartInc go up and down completely randomly.

Pair Corralation between Urban Outfitters and ABC MartInc

If you would invest  5,177  in Urban Outfitters on October 13, 2024 and sell it today you would earn a total of  519.00  from holding Urban Outfitters or generate 10.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Urban Outfitters  vs.  ABC MartInc

Urban Outfitters

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Outfitters are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Urban Outfitters displayed solid returns over the last few months and may actually be approaching a breakup point.

ABC MartInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABC MartInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABC MartInc 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 ABC MartInc

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

The idea behind Urban Outfitters and ABC MartInc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.