Correlation Between MACYS and Sweetgreen

Can any of the company-specific risk be diversified away by investing in both MACYS and Sweetgreen 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 Sweetgreen 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 Sweetgreen, you can compare the effects of market volatilities on MACYS and Sweetgreen 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 Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACYS and Sweetgreen.

Diversification Opportunities for MACYS and Sweetgreen

0.41

Correlation Coefficient

MACYS  Sweetgreen

Very weak diversification

The 3 months correlation between MACYS and Sweetgreen is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MACYS RETAIL HLDGS and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of MACYS i.e., MACYS and Sweetgreen go up and down completely randomly.

Pair Corralation between MACYS and Sweetgreen

Assuming the 90 days trading horizon MACYS RETAIL HLDGS is expected to under-perform the Sweetgreen. But the bond apears to be less risky and, when comparing its historical volatility, MACYS RETAIL HLDGS is 2.69 times less risky than Sweetgreen. The bond trades about -0.13 of its potential returns per unit of risk. The Sweetgreen is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,473  in Sweetgreen on October 20, 2024 and sell it today you would lose (123.00) from holding Sweetgreen or give up 3.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.0%
Values	Daily Returns

MACYS RETAIL HLDGS  vs.  Sweetgreen

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.

Sweetgreen

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with MACYS and Sweetgreen

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

The idea behind MACYS RETAIL HLDGS and Sweetgreen 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.