Correlation Between Under Armour and Tapestry
Can any of the company-specific risk be diversified away by investing in both Under Armour and Tapestry 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 Under Armour and Tapestry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour A and Tapestry, you can compare the effects of market volatilities on Under Armour and Tapestry 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 Under Armour with a short position of Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Tapestry.
Diversification Opportunities for Under Armour and Tapestry
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Under and Tapestry is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour A and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry and Under Armour 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 Under Armour A are associated (or correlated) with Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of Under Armour i.e., Under Armour and Tapestry go up and down completely randomly.
Pair Corralation between Under Armour and Tapestry
Considering the 90-day investment horizon Under Armour is expected to generate 1.34 times less return on investment than Tapestry. In addition to that, Under Armour is 2.04 times more volatile than Tapestry. It trades about 0.1 of its total potential returns per unit of risk. Tapestry is currently generating about 0.27 per unit of volatility. If you would invest 5,047 in Tapestry on August 29, 2024 and sell it today you would earn a total of 1,045 from holding Tapestry or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour A vs. Tapestry
Performance |
| Timeline |
| Under Armour A |
| Tapestry |
Under Armour and Tapestry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Tapestry
The main advantage of trading using opposite Under Armour and Tapestry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour position performs unexpectedly, Tapestry 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 Tapestry will offset losses from the drop in Tapestry's long position.| Under Armour vs. Levi Strauss Co | Under Armour vs. Hanesbrands | Under Armour vs. VF Corporation | Under Armour vs. Ralph Lauren Corp |
| Tapestry vs. Signet Jewelers | Tapestry vs. Movado Group | Tapestry vs. Lanvin Group Holdings | Tapestry vs. TheRealReal |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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