Correlation Between Urban Outfitters and Gap
Can any of the company-specific risk be diversified away by investing in both Urban Outfitters and Gap 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 Gap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Outfitters and The Gap, you can compare the effects of market volatilities on Urban Outfitters and Gap 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 Gap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Outfitters and Gap.
Diversification Opportunities for Urban Outfitters and Gap
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Urban and Gap is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and The Gap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap 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 Gap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and Gap go up and down completely randomly.
Pair Corralation between Urban Outfitters and Gap
Assuming the 90 days horizon Urban Outfitters is expected to generate 2.1 times less return on investment than Gap. In addition to that, Urban Outfitters is 1.17 times more volatile than The Gap. It trades about 0.01 of its total potential returns per unit of risk. The Gap is currently generating about 0.03 per unit of volatility. If you would invest 2,312 in The Gap on November 2, 2024 and sell it today you would earn a total of 30.00 from holding The Gap or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Urban Outfitters vs. The Gap
Performance |
| Timeline |
| Urban Outfitters |
| Gap |
Urban Outfitters and Gap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Outfitters and Gap
The main advantage of trading using opposite Urban Outfitters and Gap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters position performs unexpectedly, Gap 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 Gap will offset losses from the drop in Gap's long position.| Urban Outfitters vs. Firan Technology Group | Urban Outfitters vs. AMAG Austria Metall | Urban Outfitters vs. Cognizant Technology Solutions | Urban Outfitters vs. Transport International Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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