Correlation Between Foot Locker and Aramark Holdings
Can any of the company-specific risk be diversified away by investing in both Foot Locker and Aramark Holdings 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 Aramark Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Aramark Holdings, you can compare the effects of market volatilities on Foot Locker and Aramark Holdings 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 Aramark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Aramark Holdings.
Diversification Opportunities for Foot Locker and Aramark Holdings
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Foot and Aramark is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Aramark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramark Holdings 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 Aramark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramark Holdings has no effect on the direction of Foot Locker i.e., Foot Locker and Aramark Holdings go up and down completely randomly.
Pair Corralation between Foot Locker and Aramark Holdings
Allowing for the 90-day total investment horizon Foot Locker is expected to under-perform the Aramark Holdings. In addition to that, Foot Locker is 2.3 times more volatile than Aramark Holdings. It trades about -0.02 of its total potential returns per unit of risk. Aramark Holdings is currently generating about 0.05 per unit of volatility. If you would invest 3,101 in Aramark Holdings on August 27, 2024 and sell it today you would earn a total of 1,085 from holding Aramark Holdings or generate 34.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. Aramark Holdings
Performance |
| Timeline |
| Foot Locker |
| Aramark Holdings |
Foot Locker and Aramark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Aramark Holdings
The main advantage of trading using opposite Foot Locker and Aramark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Aramark Holdings 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 Aramark Holdings will offset losses from the drop in Aramark Holdings' long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| Aramark Holdings vs. Civeo Corp | Aramark Holdings vs. ABM Industries Incorporated | Aramark Holdings vs. ADM Endeavors | Aramark Holdings vs. Maximus |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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