Correlation Between Foot Locker and Reitmans (Canada)
Can any of the company-specific risk be diversified away by investing in both Foot Locker and Reitmans (Canada) 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 Reitmans (Canada) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Reitmans Limited, you can compare the effects of market volatilities on Foot Locker and Reitmans (Canada) 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 Reitmans (Canada). Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Reitmans (Canada).
Diversification Opportunities for Foot Locker and Reitmans (Canada)
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Foot and Reitmans is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans (Canada) 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 Reitmans (Canada). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans (Canada) has no effect on the direction of Foot Locker i.e., Foot Locker and Reitmans (Canada) go up and down completely randomly.
Pair Corralation between Foot Locker and Reitmans (Canada)
Allowing for the 90-day total investment horizon Foot Locker is expected to generate 7.19 times more return on investment than Reitmans (Canada). However, Foot Locker is 7.19 times more volatile than Reitmans Limited. It trades about 0.07 of its potential returns per unit of risk. Reitmans Limited is currently generating about 0.22 per unit of risk. If you would invest 2,381 in Foot Locker on August 28, 2024 and sell it today you would earn a total of 75.00 from holding Foot Locker or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. Reitmans Limited
Performance |
| Timeline |
| Foot Locker |
| Reitmans (Canada) |
Foot Locker and Reitmans (Canada) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Reitmans (Canada)
The main advantage of trading using opposite Foot Locker and Reitmans (Canada) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Reitmans (Canada) 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 Reitmans (Canada) will offset losses from the drop in Reitmans (Canada)'s long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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