Correlation Between Macys and CAREER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Macys and CAREER EDUCATION 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 Macys and CAREER EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and CAREER EDUCATION, you can compare the effects of market volatilities on Macys and CAREER EDUCATION 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 Macys with a short position of CAREER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and CAREER EDUCATION.
Diversification Opportunities for Macys and CAREER EDUCATION
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macys and CAREER is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION and Macys 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 Macys Inc are associated (or correlated) with CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of Macys i.e., Macys and CAREER EDUCATION go up and down completely randomly.
Pair Corralation between Macys and CAREER EDUCATION
Assuming the 90 days horizon Macys Inc is expected to under-perform the CAREER EDUCATION. In addition to that, Macys is 2.06 times more volatile than CAREER EDUCATION. It trades about -0.24 of its total potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.24 per unit of volatility. If you would invest 2,500 in CAREER EDUCATION on October 24, 2024 and sell it today you would earn a total of 160.00 from holding CAREER EDUCATION or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Macys Inc vs. CAREER EDUCATION
Performance |
| Timeline |
| Macys Inc |
| CAREER EDUCATION |
Macys and CAREER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macys and CAREER EDUCATION
The main advantage of trading using opposite Macys and CAREER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, CAREER EDUCATION 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 CAREER EDUCATION will offset losses from the drop in CAREER EDUCATION's long position.| Macys vs. CANON MARKETING JP | Macys vs. STRAYER EDUCATION | Macys vs. Strategic Education | Macys vs. Perdoceo Education |
| CAREER EDUCATION vs. Ebro Foods SA | CAREER EDUCATION vs. NXP Semiconductors NV | CAREER EDUCATION vs. TOREX SEMICONDUCTOR LTD | CAREER EDUCATION vs. PLANT VEDA FOODS |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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