Correlation Between NEXT Plc and Foot Locker
Can any of the company-specific risk be diversified away by investing in both NEXT Plc and Foot Locker 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 NEXT Plc and Foot Locker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXT plc and Foot Locker, you can compare the effects of market volatilities on NEXT Plc and Foot Locker 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 NEXT Plc with a short position of Foot Locker. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXT Plc and Foot Locker.
Diversification Opportunities for NEXT Plc and Foot Locker
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NEXT and Foot is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NEXT plc and Foot Locker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foot Locker and NEXT Plc 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 NEXT plc are associated (or correlated) with Foot Locker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foot Locker has no effect on the direction of NEXT Plc i.e., NEXT Plc and Foot Locker go up and down completely randomly.
Pair Corralation between NEXT Plc and Foot Locker
Assuming the 90 days horizon NEXT plc is expected to generate 0.28 times more return on investment than Foot Locker. However, NEXT plc is 3.54 times less risky than Foot Locker. It trades about 0.09 of its potential returns per unit of risk. Foot Locker is currently generating about 0.0 per unit of risk. If you would invest 11,180 in NEXT plc on September 2, 2024 and sell it today you would earn a total of 1,161 from holding NEXT plc or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXT plc vs. Foot Locker
Performance |
| Timeline |
| NEXT plc |
| Foot Locker |
NEXT Plc and Foot Locker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXT Plc and Foot Locker
The main advantage of trading using opposite NEXT Plc and Foot Locker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXT Plc position performs unexpectedly, Foot Locker 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 Foot Locker will offset losses from the drop in Foot Locker's long position.| NEXT Plc vs. Reitmans Limited | NEXT Plc vs. Reitmans Limited | NEXT Plc vs. Lulus Fashion Lounge | NEXT Plc vs. Duluth Holdings |
| Foot Locker vs. Abercrombie Fitch | Foot Locker vs. Urban Outfitters | Foot Locker vs. Childrens Place | Foot Locker 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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