Correlation Between Guess and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Guess and T.J. Maxx 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 T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guess Inc and The TJX Companies, you can compare the effects of market volatilities on Guess and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guess and T.J. Maxx.
Diversification Opportunities for Guess and T.J. Maxx
Good diversification
The 3 months correlation between Guess and T.J. is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Guess Inc and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Guess i.e., Guess and T.J. Maxx go up and down completely randomly.
Pair Corralation between Guess and T.J. Maxx
Considering the 90-day investment horizon Guess Inc is expected to under-perform the T.J. Maxx. In addition to that, Guess is 2.72 times more volatile than The TJX Companies. It trades about -0.12 of its total potential returns per unit of risk. The TJX Companies is currently generating about 0.53 per unit of volatility. If you would invest 11,376 in The TJX Companies on August 30, 2024 and sell it today you would earn a total of 1,260 from holding The TJX Companies or generate 11.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guess Inc vs. The TJX Companies
Performance |
| Timeline |
| Guess Inc |
| TJX Companies |
Guess and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guess and T.J. Maxx
The main advantage of trading using opposite Guess and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guess position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.The idea behind Guess Inc and The TJX Companies 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.| T.J. Maxx vs. Burlington Stores | T.J. Maxx vs. Guess Inc | T.J. Maxx vs. Urban Outfitters | T.J. Maxx vs. Childrens Place |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |