Correlation Between Express and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Express 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 Express 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 Express and The TJX Companies, you can compare the effects of market volatilities on Express 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 Express with a short position of T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Express and T.J. Maxx.
Diversification Opportunities for Express and T.J. Maxx
Very weak diversification
The 3 months correlation between Express and T.J. is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Express and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies and Express 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 Express 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 Express i.e., Express and T.J. Maxx go up and down completely randomly.
Pair Corralation between Express and T.J. Maxx
Given the investment horizon of 90 days Express is expected to generate 4.32 times more return on investment than T.J. Maxx. However, Express is 4.32 times more volatile than The TJX Companies. It trades about 0.17 of its potential returns per unit of risk. The TJX Companies is currently generating about 0.13 per unit of risk. If you would invest 61.00 in Express on August 31, 2024 and sell it today you would earn a total of 15.00 from holding Express or generate 24.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
Express vs. The TJX Companies
Performance |
| Timeline |
| Express |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| TJX Companies |
Express and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Express and T.J. Maxx
The main advantage of trading using opposite Express and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Express 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.| Express vs. Koss Corporation | Express vs. BlackBerry | Express vs. Castor Maritime | Express vs. Clover Health Investments |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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