Correlation Between Tandy Leather and SIGNA Sports
Can any of the company-specific risk be diversified away by investing in both Tandy Leather and SIGNA Sports 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 Tandy Leather and SIGNA Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tandy Leather Factory and SIGNA Sports United, you can compare the effects of market volatilities on Tandy Leather and SIGNA Sports 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 Tandy Leather with a short position of SIGNA Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tandy Leather and SIGNA Sports.
Diversification Opportunities for Tandy Leather and SIGNA Sports
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tandy and SIGNA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory and SIGNA Sports United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGNA Sports United and Tandy Leather 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 Tandy Leather Factory are associated (or correlated) with SIGNA Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGNA Sports United has no effect on the direction of Tandy Leather i.e., Tandy Leather and SIGNA Sports go up and down completely randomly.
Pair Corralation between Tandy Leather and SIGNA Sports
Considering the 90-day investment horizon Tandy Leather Factory is expected to generate 0.37 times more return on investment than SIGNA Sports. However, Tandy Leather Factory is 2.67 times less risky than SIGNA Sports. It trades about 0.0 of its potential returns per unit of risk. SIGNA Sports United is currently generating about -0.04 per unit of risk. If you would invest 441.00 in Tandy Leather Factory on August 31, 2024 and sell it today you would lose (32.00) from holding Tandy Leather Factory or give up 7.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 8.58% |
| Values | Daily Returns |
Tandy Leather Factory vs. SIGNA Sports United
Performance |
| Timeline |
| Tandy Leather Factory |
| SIGNA Sports United |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tandy Leather and SIGNA Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tandy Leather and SIGNA Sports
The main advantage of trading using opposite Tandy Leather and SIGNA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandy Leather position performs unexpectedly, SIGNA Sports 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 SIGNA Sports will offset losses from the drop in SIGNA Sports' long position.| Tandy Leather vs. Green River Gold | Tandy Leather vs. Dixons Carphone plc | Tandy Leather vs. Ceconomy AG ADR | Tandy Leather vs. Winmark |
| SIGNA Sports vs. Sally Beauty Holdings | SIGNA Sports vs. National Vision Holdings | SIGNA Sports vs. MarineMax | SIGNA Sports vs. Caseys General Stores |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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