Correlation Between Cars and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Cars and T.J. Maxx 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 Cars and T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and The TJX Companies, you can compare the effects of market volatilities on Cars and T.J. Maxx 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 Cars with a short position of T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and T.J. Maxx.
Diversification Opportunities for Cars and T.J. Maxx
Weak diversification
The 3 months correlation between Cars and T.J. is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies and Cars 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 Cars Inc are associated (or correlated) with T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Cars i.e., Cars and T.J. Maxx go up and down completely randomly.
Pair Corralation between Cars and T.J. Maxx
Assuming the 90 days horizon Cars Inc is expected to under-perform the T.J. Maxx. In addition to that, Cars is 1.8 times more volatile than The TJX Companies. It trades about 0.0 of its total potential returns per unit of risk. The TJX Companies is currently generating about 0.09 per unit of volatility. If you would invest 8,262 in The TJX Companies on November 28, 2024 and sell it today you would earn a total of 3,430 from holding The TJX Companies or generate 41.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Cars Inc vs. The TJX Companies
Performance |
| Timeline |
| Cars Inc |
| TJX Companies |
Cars and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and T.J. Maxx
The main advantage of trading using opposite Cars and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| Cars vs. SBM OFFSHORE | Cars vs. EITZEN CHEMICALS | Cars vs. CHEMICAL INDUSTRIES | Cars vs. Perseus Mining Limited |
| T.J. Maxx vs. AEON METALS LTD | T.J. Maxx vs. Sportsmans Warehouse Holdings | T.J. Maxx vs. Bumrungrad Hospital PCL | T.J. Maxx vs. DAIDO METAL TD |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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