Correlation Between Foot Locker and SES AI
Can any of the company-specific risk be diversified away by investing in both Foot Locker and SES AI 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 SES AI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and SES AI Corp, you can compare the effects of market volatilities on Foot Locker and SES AI 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 SES AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and SES AI.
Diversification Opportunities for Foot Locker and SES AI
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foot and SES is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and SES AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES AI Corp 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 SES AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES AI Corp has no effect on the direction of Foot Locker i.e., Foot Locker and SES AI go up and down completely randomly.
Pair Corralation between Foot Locker and SES AI
Allowing for the 90-day total investment horizon Foot Locker is expected to generate 0.68 times more return on investment than SES AI. However, Foot Locker is 1.47 times less risky than SES AI. It trades about 0.0 of its potential returns per unit of risk. SES AI Corp is currently generating about -0.07 per unit of risk. If you would invest 3,642 in Foot Locker on August 27, 2024 and sell it today you would lose (1,329) from holding Foot Locker or give up 36.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foot Locker vs. SES AI Corp
Performance |
| Timeline |
| Foot Locker |
| SES AI Corp |
Foot Locker and SES AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and SES AI
The main advantage of trading using opposite Foot Locker and SES AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, SES AI 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 SES AI will offset losses from the drop in SES AI's long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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