Correlation Between T.J. Maxx and Buckle
Can any of the company-specific risk be diversified away by investing in both T.J. Maxx and Buckle 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 Buckle 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 Buckle Inc, you can compare the effects of market volatilities on T.J. Maxx and Buckle 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 Buckle. Check out your portfolio center. Please also check ongoing floating volatility patterns of T.J. Maxx and Buckle.
Diversification Opportunities for T.J. Maxx and Buckle
Poor diversification
The 3 months correlation between T.J. and Buckle is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The TJX Companies and Buckle Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc 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 Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of T.J. Maxx i.e., T.J. Maxx and Buckle go up and down completely randomly.
Pair Corralation between T.J. Maxx and Buckle
Considering the 90-day investment horizon T.J. Maxx is expected to generate 1.18 times less return on investment than Buckle. But when comparing it to its historical volatility, The TJX Companies is 1.88 times less risky than Buckle. It trades about 0.13 of its potential returns per unit of risk. Buckle Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,028 in Buckle Inc on August 31, 2024 and sell it today you would earn a total of 2,181 from holding Buckle Inc or generate 72.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The TJX Companies vs. Buckle Inc
Performance |
| Timeline |
| TJX Companies |
| Buckle Inc |
T.J. Maxx and Buckle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T.J. Maxx and Buckle
The main advantage of trading using opposite T.J. Maxx and Buckle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T.J. Maxx position performs unexpectedly, Buckle 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 Buckle will offset losses from the drop in Buckle's long position.| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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