Correlation Between Urban Outfitters and Industria
Can any of the company-specific risk be diversified away by investing in both Urban Outfitters and Industria 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 Industria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Outfitters and Industria de Diseo, you can compare the effects of market volatilities on Urban Outfitters and Industria 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 Industria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Outfitters and Industria.
Diversification Opportunities for Urban Outfitters and Industria
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Urban and Industria is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and Industria de Diseo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industria de Diseo 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 Industria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industria de Diseo has no effect on the direction of Urban Outfitters i.e., Urban Outfitters and Industria go up and down completely randomly.
Pair Corralation between Urban Outfitters and Industria
Given the investment horizon of 90 days Urban Outfitters is expected to generate 1.1 times more return on investment than Industria. However, Urban Outfitters is 1.1 times more volatile than Industria de Diseo. It trades about 0.1 of its potential returns per unit of risk. Industria de Diseo is currently generating about 0.06 per unit of risk. If you would invest 3,985 in Urban Outfitters on November 3, 2024 and sell it today you would earn a total of 1,557 from holding Urban Outfitters or generate 39.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Urban Outfitters vs. Industria de Diseo
Performance |
| Timeline |
| Urban Outfitters |
| Industria de Diseo |
Urban Outfitters and Industria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Outfitters and Industria
The main advantage of trading using opposite Urban Outfitters and Industria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters position performs unexpectedly, Industria 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 Industria will offset losses from the drop in Industria's long position.| Urban Outfitters vs. American Eagle Outfitters | Urban Outfitters vs. Foot Locker | Urban Outfitters vs. Childrens Place | Urban Outfitters vs. Abercrombie Fitch |
| Industria vs. Fast Retailing Co | Industria vs. The TJX Companies | Industria vs. Ross Stores | Industria vs. Urban 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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