Correlation Between Abercrombie Fitch and Gap,
Can any of the company-specific risk be diversified away by investing in both Abercrombie Fitch and Gap, 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 Abercrombie Fitch and Gap, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abercrombie Fitch and The Gap,, you can compare the effects of market volatilities on Abercrombie Fitch and Gap, 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 Abercrombie Fitch with a short position of Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abercrombie Fitch and Gap,.
Diversification Opportunities for Abercrombie Fitch and Gap,
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Abercrombie and Gap, is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Abercrombie Fitch and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, and Abercrombie Fitch 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 Abercrombie Fitch are associated (or correlated) with Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Abercrombie Fitch i.e., Abercrombie Fitch and Gap, go up and down completely randomly.
Pair Corralation between Abercrombie Fitch and Gap,
Considering the 90-day investment horizon Abercrombie Fitch is expected to generate 1.27 times less return on investment than Gap,. In addition to that, Abercrombie Fitch is 1.2 times more volatile than The Gap,. It trades about 0.04 of its total potential returns per unit of risk. The Gap, is currently generating about 0.06 per unit of volatility. If you would invest 2,148 in The Gap, on August 24, 2024 and sell it today you would earn a total of 56.00 from holding The Gap, or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abercrombie Fitch vs. The Gap,
Performance |
| Timeline |
| Abercrombie Fitch |
| Gap, |
Abercrombie Fitch and Gap, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abercrombie Fitch and Gap,
The main advantage of trading using opposite Abercrombie Fitch and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abercrombie Fitch position performs unexpectedly, Gap, 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 Gap, will offset losses from the drop in Gap,'s long position.| Abercrombie Fitch vs. Urban Outfitters | Abercrombie Fitch vs. Foot Locker | Abercrombie Fitch vs. Childrens Place | Abercrombie Fitch vs. American Eagle Outfitters |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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