Correlation Between MACYS and Compania Cervecerias

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

By analyzing existing cross correlation between MACYS RETAIL HLDGS and Compania Cervecerias Unidas, you can compare the effects of market volatilities on MACYS and Compania Cervecerias 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 MACYS with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACYS and Compania Cervecerias.

Diversification Opportunities for MACYS and Compania Cervecerias

-0.45

Correlation Coefficient

MACYS  Compania Cervecerias

Very good diversification

The 3 months correlation between MACYS and Compania is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MACYS RETAIL HLDGS and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and MACYS 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 MACYS RETAIL HLDGS are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of MACYS i.e., MACYS and Compania Cervecerias go up and down completely randomly.

Pair Corralation between MACYS and Compania Cervecerias

Assuming the 90 days trading horizon MACYS RETAIL HLDGS is expected to under-perform the Compania Cervecerias. But the bond apears to be less risky and, when comparing its historical volatility, MACYS RETAIL HLDGS is 1.04 times less risky than Compania Cervecerias. The bond trades about -0.04 of its potential returns per unit of risk. The Compania Cervecerias Unidas is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,118  in Compania Cervecerias Unidas on October 4, 2024 and sell it today you would earn a total of  15.00  from holding Compania Cervecerias Unidas or generate 1.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

MACYS RETAIL HLDGS  vs.  Compania Cervecerias Unidas

MACYS RETAIL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MACYS RETAIL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MACYS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compania Cervecerias

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Cervecerias Unidas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Compania Cervecerias is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MACYS and Compania Cervecerias

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

The idea behind MACYS RETAIL HLDGS and Compania Cervecerias Unidas 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.