Correlation Between Foot Locker and Xcel Brands
Can any of the company-specific risk be diversified away by investing in both Foot Locker and Xcel Brands 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 Xcel Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foot Locker and Xcel Brands, you can compare the effects of market volatilities on Foot Locker and Xcel Brands 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 Xcel Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foot Locker and Xcel Brands.
Diversification Opportunities for Foot Locker and Xcel Brands
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Foot and Xcel is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Brands 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 Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of Foot Locker i.e., Foot Locker and Xcel Brands go up and down completely randomly.
Pair Corralation between Foot Locker and Xcel Brands
Allowing for the 90-day total investment horizon Foot Locker is expected to generate 0.81 times more return on investment than Xcel Brands. However, Foot Locker is 1.23 times less risky than Xcel Brands. It trades about 0.07 of its potential returns per unit of risk. Xcel Brands is currently generating about -0.22 per unit of risk. If you would invest 2,448 in Foot Locker on September 4, 2024 and sell it today you would earn a total of 66.00 from holding Foot Locker or generate 2.7% 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. Xcel Brands
Performance |
| Timeline |
| Foot Locker |
| Xcel Brands |
Foot Locker and Xcel Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foot Locker and Xcel Brands
The main advantage of trading using opposite Foot Locker and Xcel Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Xcel Brands 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 Xcel Brands will offset losses from the drop in Xcel Brands' long position.| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker vs. American Eagle Outfitters |
| Xcel Brands vs. Appian Corp | Xcel Brands vs. Okta Inc | Xcel Brands vs. MongoDB | Xcel Brands vs. Twilio Inc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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