Correlation Between Macys and Portillos
Can any of the company-specific risk be diversified away by investing in both Macys and Portillos 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 Macys and Portillos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and Portillos, you can compare the effects of market volatilities on Macys and Portillos 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 Macys with a short position of Portillos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and Portillos.
Diversification Opportunities for Macys and Portillos
Excellent diversification
The 3 months correlation between Macys and Portillos is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos and Macys 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 Macys Inc are associated (or correlated) with Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Macys i.e., Macys and Portillos go up and down completely randomly.
Pair Corralation between Macys and Portillos
Taking into account the 90-day investment horizon Macys Inc is expected to under-perform the Portillos. But the stock apears to be less risky and, when comparing its historical volatility, Macys Inc is 1.81 times less risky than Portillos. The stock trades about -0.13 of its potential returns per unit of risk. The Portillos is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 951.00 in Portillos on November 4, 2024 and sell it today you would earn a total of 440.00 from holding Portillos or generate 46.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macys Inc vs. Portillos
Performance |
| Timeline |
| Macys Inc |
| Portillos |
Macys and Portillos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macys and Portillos
The main advantage of trading using opposite Macys and Portillos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, Portillos 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 Portillos will offset losses from the drop in Portillos' long position.The idea behind Macys Inc and Portillos 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.| Portillos vs. Brinker International | Portillos vs. Bloomin Brands | Portillos vs. Wingstop | Portillos vs. Papa Johns International |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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