Correlation Between Guess and Abercrombie Fitch
Can any of the company-specific risk be diversified away by investing in both Guess and Abercrombie Fitch 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 Guess and Abercrombie Fitch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guess Inc and Abercrombie Fitch, you can compare the effects of market volatilities on Guess and Abercrombie Fitch 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 Guess with a short position of Abercrombie Fitch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guess and Abercrombie Fitch.
Diversification Opportunities for Guess and Abercrombie Fitch
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guess and Abercrombie is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Guess Inc and Abercrombie Fitch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abercrombie Fitch and Guess 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 Guess Inc are associated (or correlated) with Abercrombie Fitch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abercrombie Fitch has no effect on the direction of Guess i.e., Guess and Abercrombie Fitch go up and down completely randomly.
Pair Corralation between Guess and Abercrombie Fitch
Considering the 90-day investment horizon Guess Inc is expected to under-perform the Abercrombie Fitch. But the stock apears to be less risky and, when comparing its historical volatility, Guess Inc is 1.22 times less risky than Abercrombie Fitch. The stock trades about -0.16 of its potential returns per unit of risk. The Abercrombie Fitch is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 13,792 in Abercrombie Fitch on August 29, 2024 and sell it today you would earn a total of 1,064 from holding Abercrombie Fitch or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guess Inc vs. Abercrombie Fitch
Performance |
| Timeline |
| Guess Inc |
| Abercrombie Fitch |
Guess and Abercrombie Fitch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guess and Abercrombie Fitch
The main advantage of trading using opposite Guess and Abercrombie Fitch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guess position performs unexpectedly, Abercrombie Fitch 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 Abercrombie Fitch will offset losses from the drop in Abercrombie Fitch's long position.The idea behind Guess Inc and Abercrombie Fitch 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.| Abercrombie Fitch vs. Urban Outfitters | Abercrombie Fitch vs. Foot Locker | Abercrombie Fitch vs. Childrens Place | Abercrombie Fitch 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |