Correlation Between Foot Locker and Lands End
Can any of the company-specific risk be diversified away by investing in both Foot Locker and Lands End 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 Lands End into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Lands End, you can compare the effects of market volatilities on Foot Locker and Lands End 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 Lands End. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Lands End.
Diversification Opportunities for Foot Locker and Lands End
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Foot and Lands is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End 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 Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of Foot Locker i.e., Foot Locker and Lands End go up and down completely randomly.
Pair Corralation between Foot Locker and Lands End
Allowing for the 90-day total investment horizon Foot Locker is expected to generate 3.5 times less return on investment than Lands End. In addition to that, Foot Locker is 1.04 times more volatile than Lands End. It trades about 0.02 of its total potential returns per unit of risk. Lands End is currently generating about 0.05 per unit of volatility. If you would invest 958.00 in Lands End on September 12, 2024 and sell it today you would earn a total of 547.00 from holding Lands End or generate 57.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. Lands End
Performance |
| Timeline |
| Foot Locker |
| Lands End |
Foot Locker and Lands End Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Lands End
The main advantage of trading using opposite Foot Locker and Lands End positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Lands End 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 Lands End will offset losses from the drop in Lands End's long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| Lands End vs. Foot Locker | Lands End vs. Duluth Holdings | Lands End vs. Destination XL Group | Lands End vs. Victorias Secret Co |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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