Correlation Between Yunji and Nordstrom
Can any of the company-specific risk be diversified away by investing in both Yunji and Nordstrom 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 Yunji and Nordstrom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yunji Inc and Nordstrom, you can compare the effects of market volatilities on Yunji and Nordstrom 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 Yunji with a short position of Nordstrom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunji and Nordstrom.
Diversification Opportunities for Yunji and Nordstrom
Very good diversification
The 3 months correlation between Yunji and Nordstrom is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yunji Inc and Nordstrom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordstrom and Yunji 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 Yunji Inc are associated (or correlated) with Nordstrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordstrom has no effect on the direction of Yunji i.e., Yunji and Nordstrom go up and down completely randomly.
Pair Corralation between Yunji and Nordstrom
Allowing for the 90-day total investment horizon Yunji Inc is expected to under-perform the Nordstrom. In addition to that, Yunji is 4.76 times more volatile than Nordstrom. It trades about -0.09 of its total potential returns per unit of risk. Nordstrom is currently generating about -0.04 per unit of volatility. If you would invest 2,269 in Nordstrom on August 24, 2024 and sell it today you would lose (32.00) from holding Nordstrom or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yunji Inc vs. Nordstrom
Performance |
| Timeline |
| Yunji Inc |
| Nordstrom |
Yunji and Nordstrom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yunji and Nordstrom
The main advantage of trading using opposite Yunji and Nordstrom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunji position performs unexpectedly, Nordstrom 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 Nordstrom will offset losses from the drop in Nordstrom's long position.The idea behind Yunji Inc and Nordstrom pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nordstrom vs. Kohls Corp | Nordstrom vs. Dillards | Nordstrom vs. Marks Spencer Group | Nordstrom vs. Marks and Spencer |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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