Correlation Between Buckle and Tillys
Can any of the company-specific risk be diversified away by investing in both Buckle and Tillys 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 Tillys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buckle Inc and Tillys Inc, you can compare the effects of market volatilities on Buckle and Tillys 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 Tillys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buckle and Tillys.
Diversification Opportunities for Buckle and Tillys
Average diversification
The 3 months correlation between Buckle and Tillys is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Buckle Inc and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys Inc 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 Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Buckle i.e., Buckle and Tillys go up and down completely randomly.
Pair Corralation between Buckle and Tillys
Considering the 90-day investment horizon Buckle Inc is expected to under-perform the Tillys. But the stock apears to be less risky and, when comparing its historical volatility, Buckle Inc is 2.0 times less risky than Tillys. The stock trades about -0.38 of its potential returns per unit of risk. The Tillys Inc is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 415.00 in Tillys Inc on November 18, 2024 and sell it today you would lose (28.00) from holding Tillys Inc or give up 6.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buckle Inc vs. Tillys Inc
Performance |
| Timeline |
| Buckle Inc |
| Tillys Inc |
Buckle and Tillys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buckle and Tillys
The main advantage of trading using opposite Buckle and Tillys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buckle position performs unexpectedly, Tillys 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 Tillys will offset losses from the drop in Tillys' long position.The idea behind Buckle Inc and Tillys Inc 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 Stocks Directory module to find actively traded stocks across global markets.
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