Correlation Between T.J. Maxx and Gap
Can any of the company-specific risk be diversified away by investing in both T.J. Maxx and Gap 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 T.J. Maxx and Gap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The TJX Companies and The Gap, you can compare the effects of market volatilities on T.J. Maxx and Gap 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 T.J. Maxx with a short position of Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of T.J. Maxx and Gap.
Diversification Opportunities for T.J. Maxx and Gap
Modest diversification
The 3 months correlation between T.J. and Gap is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding The TJX Companies and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap and T.J. Maxx 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 The TJX Companies are associated (or correlated) with Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of T.J. Maxx i.e., T.J. Maxx and Gap go up and down completely randomly.
Pair Corralation between T.J. Maxx and Gap
Assuming the 90 days horizon The TJX Companies is expected to generate 0.37 times more return on investment than Gap. However, The TJX Companies is 2.69 times less risky than Gap. It trades about 0.1 of its potential returns per unit of risk. The Gap is currently generating about -0.02 per unit of risk. If you would invest 9,482 in The TJX Companies on November 28, 2024 and sell it today you would earn a total of 2,210 from holding The TJX Companies or generate 23.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
The TJX Companies vs. The Gap
Performance |
| Timeline |
| TJX Companies |
| Gap |
T.J. Maxx and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T.J. Maxx and Gap
The main advantage of trading using opposite T.J. Maxx and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T.J. Maxx position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's long position.| T.J. Maxx vs. Xtep International Holdings | T.J. Maxx vs. Urban Outfitters | T.J. Maxx vs. Superior Plus Corp | T.J. Maxx vs. Origin Agritech |
| Gap vs. MidCap Financial Investment | Gap vs. CENTURIA OFFICE REIT | Gap vs. Platinum Investment Management | Gap vs. Canadian Utilities Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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