Correlation Between Industria and Urban Outfitters
Can any of the company-specific risk be diversified away by investing in both Industria 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 Industria and Urban Outfitters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industria de Diseo and Urban Outfitters, you can compare the effects of market volatilities on Industria 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 Industria with a short position of Urban Outfitters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and Urban Outfitters.
Diversification Opportunities for Industria and Urban Outfitters
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Industria and Urban is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseo and Urban Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Outfitters and Industria 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 Industria de Diseo 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 Industria i.e., Industria and Urban Outfitters go up and down completely randomly.
Pair Corralation between Industria and Urban Outfitters
Assuming the 90 days horizon Industria de Diseo is expected to generate 0.82 times more return on investment than Urban Outfitters. However, Industria de Diseo is 1.23 times less risky than Urban Outfitters. It trades about 0.07 of its potential returns per unit of risk. Urban Outfitters is currently generating about 0.04 per unit of risk. If you would invest 4,737 in Industria de Diseo on August 30, 2024 and sell it today you would earn a total of 851.00 from holding Industria de Diseo or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industria de Diseo vs. Urban Outfitters
Performance |
| Timeline |
| Industria de Diseo |
| Urban Outfitters |
Industria and Urban Outfitters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industria and Urban Outfitters
The main advantage of trading using opposite Industria and Urban Outfitters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria 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.| Industria vs. Fast Retailing Co | Industria vs. The TJX Companies | Industria vs. Ross Stores | Industria vs. Urban Outfitters |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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