Correlation Between Genesco and Urban Outfitters
Can any of the company-specific risk be diversified away by investing in both Genesco and Urban Outfitters 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 Genesco and Urban Outfitters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genesco and Urban Outfitters, you can compare the effects of market volatilities on Genesco and Urban Outfitters 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 Genesco with a short position of Urban Outfitters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesco and Urban Outfitters.
Diversification Opportunities for Genesco and Urban Outfitters
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Genesco and Urban is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Genesco and Urban Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Outfitters and Genesco 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 Genesco are associated (or correlated) with Urban Outfitters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Outfitters has no effect on the direction of Genesco i.e., Genesco and Urban Outfitters go up and down completely randomly.
Pair Corralation between Genesco and Urban Outfitters
Considering the 90-day investment horizon Genesco is expected to generate 1.06 times less return on investment than Urban Outfitters. In addition to that, Genesco is 1.1 times more volatile than Urban Outfitters. It trades about 0.14 of its total potential returns per unit of risk. Urban Outfitters is currently generating about 0.16 per unit of volatility. If you would invest 3,831 in Urban Outfitters on August 30, 2024 and sell it today you would earn a total of 918.00 from holding Urban Outfitters or generate 23.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Genesco vs. Urban Outfitters
Performance |
| Timeline |
| Genesco |
| Urban Outfitters |
Genesco and Urban Outfitters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genesco and Urban Outfitters
The main advantage of trading using opposite Genesco and Urban Outfitters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesco position performs unexpectedly, Urban Outfitters 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 Urban Outfitters will offset losses from the drop in Urban Outfitters' long position.The idea behind Genesco and Urban Outfitters pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Urban Outfitters vs. American Eagle Outfitters | Urban Outfitters vs. Foot Locker | Urban Outfitters vs. Childrens Place | Urban Outfitters vs. Abercrombie Fitch |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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