Correlation Between Buckle and Stitch Fix
Can any of the company-specific risk be diversified away by investing in both Buckle and Stitch Fix 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 Buckle and Stitch Fix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buckle Inc and Stitch Fix, you can compare the effects of market volatilities on Buckle and Stitch Fix 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 Buckle with a short position of Stitch Fix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buckle and Stitch Fix.
Diversification Opportunities for Buckle and Stitch Fix
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Buckle and Stitch is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Buckle Inc and Stitch Fix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stitch Fix and Buckle 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 Buckle Inc are associated (or correlated) with Stitch Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stitch Fix has no effect on the direction of Buckle i.e., Buckle and Stitch Fix go up and down completely randomly.
Pair Corralation between Buckle and Stitch Fix
Considering the 90-day investment horizon Buckle is expected to generate 2.09 times less return on investment than Stitch Fix. But when comparing it to its historical volatility, Buckle Inc is 2.86 times less risky than Stitch Fix. It trades about 0.05 of its potential returns per unit of risk. Stitch Fix is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 408.00 in Stitch Fix on September 3, 2024 and sell it today you would earn a total of 68.00 from holding Stitch Fix or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buckle Inc vs. Stitch Fix
Performance |
| Timeline |
| Buckle Inc |
| Stitch Fix |
Buckle and Stitch Fix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buckle and Stitch Fix
The main advantage of trading using opposite Buckle and Stitch Fix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buckle position performs unexpectedly, Stitch Fix 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 Stitch Fix will offset losses from the drop in Stitch Fix's long position.The idea behind Buckle Inc and Stitch Fix 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.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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