Correlation Between Urban Outfitters and Abercrombie Fitch
Can any of the company-specific risk be diversified away by investing in both Urban Outfitters and Abercrombie Fitch 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 Abercrombie Fitch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Outfitters and Abercrombie Fitch, you can compare the effects of market volatilities on Urban Outfitters and Abercrombie Fitch 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 Abercrombie Fitch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Outfitters and Abercrombie Fitch.
Diversification Opportunities for Urban Outfitters and Abercrombie Fitch
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Urban and Abercrombie is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and Abercrombie Fitch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abercrombie Fitch 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 Abercrombie Fitch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abercrombie Fitch has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and Abercrombie Fitch go up and down completely randomly.
Pair Corralation between Urban Outfitters and Abercrombie Fitch
Given the investment horizon of 90 days Urban Outfitters is expected to generate 0.69 times more return on investment than Abercrombie Fitch. However, Urban Outfitters is 1.45 times less risky than Abercrombie Fitch. It trades about 0.25 of its potential returns per unit of risk. Abercrombie Fitch is currently generating about 0.04 per unit of risk. If you would invest 3,524 in Urban Outfitters on August 24, 2024 and sell it today you would earn a total of 379.00 from holding Urban Outfitters or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Urban Outfitters vs. Abercrombie Fitch
Performance |
| Timeline |
| Urban Outfitters |
| Abercrombie Fitch |
Urban Outfitters and Abercrombie Fitch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Outfitters and Abercrombie Fitch
The main advantage of trading using opposite Urban Outfitters and Abercrombie Fitch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters position performs unexpectedly, Abercrombie Fitch 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 Abercrombie Fitch will offset losses from the drop in Abercrombie Fitch's long position.| Urban Outfitters vs. American Eagle Outfitters | Urban Outfitters vs. Foot Locker | Urban Outfitters vs. Childrens Place | Urban Outfitters vs. Abercrombie Fitch |
| Abercrombie Fitch vs. Urban Outfitters | Abercrombie Fitch vs. Foot Locker | Abercrombie Fitch vs. Childrens Place | Abercrombie Fitch vs. American Eagle Outfitters |
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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