Correlation Between T.J. Maxx and Guess
Can any of the company-specific risk be diversified away by investing in both T.J. Maxx and Guess 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 Guess 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 Guess Inc, you can compare the effects of market volatilities on T.J. Maxx and Guess 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 Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of T.J. Maxx and Guess.
Diversification Opportunities for T.J. Maxx and Guess
Average diversification
The 3 months correlation between T.J. and Guess is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding The TJX Companies and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess 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 Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of T.J. Maxx i.e., T.J. Maxx and Guess go up and down completely randomly.
Pair Corralation between T.J. Maxx and Guess
Considering the 90-day investment horizon The TJX Companies is expected to generate 0.19 times more return on investment than Guess. However, The TJX Companies is 5.21 times less risky than Guess. It trades about 0.05 of its potential returns per unit of risk. Guess Inc is currently generating about -0.03 per unit of risk. If you would invest 11,761 in The TJX Companies on January 7, 2025 and sell it today you would earn a total of 188.50 from holding The TJX Companies or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The TJX Companies vs. Guess Inc
Performance |
| Timeline |
| TJX Companies |
| Guess Inc |
T.J. Maxx and Guess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T.J. Maxx and Guess
The main advantage of trading using opposite T.J. Maxx and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T.J. Maxx position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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