Correlation Between MACYS and Universal Technical

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

Diversification Opportunities for MACYS and Universal Technical

-0.13

Correlation Coefficient

MACYS  Universal Technical

Good diversification

The 3 months correlation between MACYS and Universal is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding MACYS RETAIL HLDGS and Universal Technical Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Technical 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 Universal Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Technical has no effect on the direction of MACYS i.e., MACYS and Universal Technical go up and down completely randomly.

Pair Corralation between MACYS and Universal Technical

Assuming the 90 days trading horizon MACYS RETAIL HLDGS is expected to under-perform the Universal Technical. But the bond apears to be less risky and, when comparing its historical volatility, MACYS RETAIL HLDGS is 2.91 times less risky than Universal Technical. The bond trades about -0.1 of its potential returns per unit of risk. The Universal Technical Institute is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,594  in Universal Technical Institute on September 25, 2024 and sell it today you would earn a total of  17.50  from holding Universal Technical Institute or generate 0.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

MACYS RETAIL HLDGS  vs.  Universal Technical Institute

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Universal Technical

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Universal Technical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MACYS and Universal Technical

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

The idea behind MACYS RETAIL HLDGS and Universal Technical Institute 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.