Correlation Between Urban Outfitters and ARISTOCRAT LEISURE
Can any of the company-specific risk be diversified away by investing in both Urban Outfitters and ARISTOCRAT LEISURE 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 Urban Outfitters and ARISTOCRAT LEISURE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Outfitters and ARISTOCRAT LEISURE, you can compare the effects of market volatilities on Urban Outfitters and ARISTOCRAT LEISURE 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 Urban Outfitters with a short position of ARISTOCRAT LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Outfitters and ARISTOCRAT LEISURE.
Diversification Opportunities for Urban Outfitters and ARISTOCRAT LEISURE
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Urban and ARISTOCRAT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and ARISTOCRAT LEISURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARISTOCRAT LEISURE and Urban Outfitters 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 Urban Outfitters are associated (or correlated) with ARISTOCRAT LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARISTOCRAT LEISURE has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and ARISTOCRAT LEISURE go up and down completely randomly.
Pair Corralation between Urban Outfitters and ARISTOCRAT LEISURE
Assuming the 90 days horizon Urban Outfitters is expected to generate 2.31 times more return on investment than ARISTOCRAT LEISURE. However, Urban Outfitters is 2.31 times more volatile than ARISTOCRAT LEISURE. It trades about 0.07 of its potential returns per unit of risk. ARISTOCRAT LEISURE is currently generating about 0.13 per unit of risk. If you would invest 2,594 in Urban Outfitters on November 7, 2024 and sell it today you would earn a total of 2,606 from holding Urban Outfitters or generate 100.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Urban Outfitters vs. ARISTOCRAT LEISURE
Performance |
| Timeline |
| Urban Outfitters |
| ARISTOCRAT LEISURE |
Urban Outfitters and ARISTOCRAT LEISURE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Outfitters and ARISTOCRAT LEISURE
The main advantage of trading using opposite Urban Outfitters and ARISTOCRAT LEISURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters position performs unexpectedly, ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE will offset losses from the drop in ARISTOCRAT LEISURE's long position.| Urban Outfitters vs. Industria de Diseno | Urban Outfitters vs. The TJX Companies | Urban Outfitters vs. Fast Retailing Co | Urban Outfitters vs. Lululemon Athletica |
| ARISTOCRAT LEISURE vs. TT Electronics PLC | ARISTOCRAT LEISURE vs. Aegean Airlines SA | ARISTOCRAT LEISURE vs. Methode Electronics | ARISTOCRAT LEISURE vs. Samsung Electronics Co |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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