Correlation Between Foot Locker and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Foot Locker and Alibaba Group 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 Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Alibaba Group Holding, you can compare the effects of market volatilities on Foot Locker and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Alibaba Group.
Diversification Opportunities for Foot Locker and Alibaba Group
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Foot and Alibaba is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Foot Locker i.e., Foot Locker and Alibaba Group go up and down completely randomly.
Pair Corralation between Foot Locker and Alibaba Group
Allowing for the 90-day total investment horizon Foot Locker is expected to under-perform the Alibaba Group. In addition to that, Foot Locker is 1.51 times more volatile than Alibaba Group Holding. It trades about 0.0 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about 0.01 per unit of volatility. If you would invest 8,857 in Alibaba Group Holding on August 24, 2024 and sell it today you would lose (544.00) from holding Alibaba Group Holding or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. Alibaba Group Holding
Performance |
| Timeline |
| Foot Locker |
| Alibaba Group Holding |
Foot Locker and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Alibaba Group
The main advantage of trading using opposite Foot Locker and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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