Correlation Between Plastic Omnium and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium and The TJX Companies, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and T.J. Maxx.
Diversification Opportunities for Plastic Omnium and T.J. Maxx
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Plastic and T.J. is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and T.J. Maxx go up and down completely randomly.
Pair Corralation between Plastic Omnium and T.J. Maxx
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the T.J. Maxx. In addition to that, Plastic Omnium is 2.07 times more volatile than The TJX Companies. It trades about -0.02 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 7,048 in The TJX Companies on November 28, 2024 and sell it today you would earn a total of 4,644 from holding The TJX Companies or generate 65.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Plastic Omnium vs. The TJX Companies
Performance |
| Timeline |
| Plastic Omnium |
| TJX Companies |
Plastic Omnium and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and T.J. Maxx
The main advantage of trading using opposite Plastic Omnium and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. SmarTone Telecommunications Holdings | Plastic Omnium vs. Spirent Communications plc | Plastic Omnium vs. EMBARK EDUCATION LTD | Plastic Omnium vs. Grand Canyon Education |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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