Correlation Between Foot Locker and TheRealReal
Can any of the company-specific risk be diversified away by investing in both Foot Locker and TheRealReal 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 TheRealReal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and TheRealReal, you can compare the effects of market volatilities on Foot Locker and TheRealReal 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 TheRealReal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and TheRealReal.
Diversification Opportunities for Foot Locker and TheRealReal
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Foot and TheRealReal is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and TheRealReal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TheRealReal 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 TheRealReal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TheRealReal has no effect on the direction of Foot Locker i.e., Foot Locker and TheRealReal go up and down completely randomly.
Pair Corralation between Foot Locker and TheRealReal
Allowing for the 90-day total investment horizon Foot Locker is expected to under-perform the TheRealReal. But the stock apears to be less risky and, when comparing its historical volatility, Foot Locker is 1.97 times less risky than TheRealReal. The stock trades about -0.25 of its potential returns per unit of risk. The TheRealReal is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 984.00 in TheRealReal on November 2, 2024 and sell it today you would lose (55.00) from holding TheRealReal or give up 5.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. TheRealReal
Performance |
| Timeline |
| Foot Locker |
| TheRealReal |
Foot Locker and TheRealReal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and TheRealReal
The main advantage of trading using opposite Foot Locker and TheRealReal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, TheRealReal 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 TheRealReal will offset losses from the drop in TheRealReal's long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| TheRealReal vs. Capri Holdings | TheRealReal vs. Movado Group | TheRealReal vs. Tapestry | TheRealReal vs. Brilliant Earth Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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