Correlation Between Urban Outfitters and Express

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

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

Diversification Opportunities for Urban Outfitters and Express

0.01

Correlation Coefficient

Urban Outfitters  Express

Significant diversification

The 3 months correlation between Urban and Express is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Express 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 Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Express has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and Express go up and down completely randomly.

Pair Corralation between Urban Outfitters and Express

If you would invest  3,598  in Urban Outfitters on September 1, 2024 and sell it today you would earn a total of  1,275  from holding Urban Outfitters or generate 35.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Urban Outfitters  vs.  Express

Urban Outfitters

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Outfitters are ranked lower than 13 (%) 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.

Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Express is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Urban Outfitters and Express

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

The idea behind Urban Outfitters and Express 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.