Correlation Between Foot Locker and Arhaus
Can any of the company-specific risk be diversified away by investing in both Foot Locker and Arhaus 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 Foot Locker and Arhaus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Arhaus Inc, you can compare the effects of market volatilities on Foot Locker and Arhaus 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 Foot Locker with a short position of Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Arhaus.
Diversification Opportunities for Foot Locker and Arhaus
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foot and Arhaus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Foot Locker 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 Foot Locker are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Foot Locker i.e., Foot Locker and Arhaus go up and down completely randomly.
Pair Corralation between Foot Locker and Arhaus
Allowing for the 90-day total investment horizon Foot Locker is expected to generate 0.99 times more return on investment than Arhaus. However, Foot Locker is 1.01 times less risky than Arhaus. It trades about 0.01 of its potential returns per unit of risk. Arhaus Inc is currently generating about -0.12 per unit of risk. If you would invest 2,302 in Foot Locker on August 24, 2024 and sell it today you would lose (57.00) from holding Foot Locker or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. Arhaus Inc
Performance |
| Timeline |
| Foot Locker |
| Arhaus Inc |
Foot Locker and Arhaus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Arhaus
The main advantage of trading using opposite Foot Locker and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Arhaus 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 Arhaus will offset losses from the drop in Arhaus' long position.| Foot Locker vs. Ross Stores | Foot Locker vs. Childrens Place | Foot Locker vs. Guess Inc | Foot Locker vs. Cato Corporation |
| Arhaus vs. Small Cap Core | Arhaus vs. Freedom Holding Corp | Arhaus vs. Gfl Environmental Holdings | Arhaus vs. Growth Fund Of |
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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