Correlation Between Foot Locker and GPS Old
Can any of the company-specific risk be diversified away by investing in both Foot Locker and GPS Old 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 GPS Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and GPS Old, you can compare the effects of market volatilities on Foot Locker and GPS Old 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 GPS Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and GPS Old.
Diversification Opportunities for Foot Locker and GPS Old
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Foot and GPS is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and GPS Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GPS Old 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 GPS Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GPS Old has no effect on the direction of Foot Locker i.e., Foot Locker and GPS Old go up and down completely randomly.
Pair Corralation between Foot Locker and GPS Old
Allowing for the 90-day total investment horizon Foot Locker is expected to under-perform the GPS Old. In addition to that, Foot Locker is 1.05 times more volatile than GPS Old. It trades about -0.01 of its total potential returns per unit of risk. GPS Old is currently generating about 0.06 per unit of volatility. If you would invest 1,262 in GPS Old on October 14, 2024 and sell it today you would earn a total of 1,066 from holding GPS Old or generate 84.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.25% |
| Values | Daily Returns |
Foot Locker vs. GPS Old
Performance |
| Timeline |
| Foot Locker |
| GPS Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Foot Locker and GPS Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and GPS Old
The main advantage of trading using opposite Foot Locker and GPS Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, GPS Old 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 GPS Old will offset losses from the drop in GPS Old's long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| GPS Old vs. Abercrombie Fitch | GPS Old vs. Urban Outfitters | GPS Old vs. Foot Locker | GPS Old vs. Childrens Place |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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