Correlation Between Urban Outfitters and Guess
Can any of the company-specific risk be diversified away by investing in both Urban Outfitters and Guess 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 Guess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Outfitters and Guess Inc, you can compare the effects of market volatilities on Urban Outfitters and Guess 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 Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Outfitters and Guess.
Diversification Opportunities for Urban Outfitters and Guess
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Urban and Guess is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc 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 Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and Guess go up and down completely randomly.
Pair Corralation between Urban Outfitters and Guess
Given the investment horizon of 90 days Urban Outfitters is expected to generate 0.95 times more return on investment than Guess. However, Urban Outfitters is 1.05 times less risky than Guess. It trades about 0.04 of its potential returns per unit of risk. Guess Inc is currently generating about 0.01 per unit of risk. If you would invest 2,877 in Urban Outfitters on August 27, 2024 and sell it today you would earn a total of 1,021 from holding Urban Outfitters or generate 35.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Urban Outfitters vs. Guess Inc
Performance |
| Timeline |
| Urban Outfitters |
| Guess Inc |
Urban Outfitters and Guess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Outfitters and Guess
The main advantage of trading using opposite Urban Outfitters and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' long position.| Urban Outfitters vs. American Eagle Outfitters | Urban Outfitters vs. Foot Locker | Urban Outfitters vs. Childrens Place | Urban Outfitters vs. Abercrombie Fitch |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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