Correlation Between T.J. Maxx and Urban Outfitters
Can any of the company-specific risk be diversified away by investing in both T.J. Maxx and Urban Outfitters 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 Urban Outfitters 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 Urban Outfitters, you can compare the effects of market volatilities on T.J. Maxx and Urban Outfitters 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 Urban Outfitters. Check out your portfolio center. Please also check ongoing floating volatility patterns of T.J. Maxx and Urban Outfitters.
Diversification Opportunities for T.J. Maxx and Urban Outfitters
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between T.J. and Urban is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The TJX Companies and Urban Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Outfitters 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 Urban Outfitters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Outfitters has no effect on the direction of T.J. Maxx i.e., T.J. Maxx and Urban Outfitters go up and down completely randomly.
Pair Corralation between T.J. Maxx and Urban Outfitters
Considering the 90-day investment horizon The TJX Companies is expected to generate 0.38 times more return on investment than Urban Outfitters. However, The TJX Companies is 2.66 times less risky than Urban Outfitters. It trades about 0.14 of its potential returns per unit of risk. Urban Outfitters is currently generating about 0.04 per unit of risk. If you would invest 10,475 in The TJX Companies on August 30, 2024 and sell it today you would earn a total of 2,161 from holding The TJX Companies or generate 20.63% 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. Urban Outfitters
Performance |
| Timeline |
| TJX Companies |
| Urban Outfitters |
T.J. Maxx and Urban Outfitters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T.J. Maxx and Urban Outfitters
The main advantage of trading using opposite T.J. Maxx and Urban Outfitters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T.J. Maxx position performs unexpectedly, Urban Outfitters 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 Urban Outfitters will offset losses from the drop in Urban Outfitters' 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 |
| Urban Outfitters vs. American Eagle Outfitters | Urban Outfitters vs. Foot Locker | Urban Outfitters vs. Childrens Place | Urban Outfitters vs. Abercrombie Fitch |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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