Correlation Between Macys and AutoNation
Can any of the company-specific risk be diversified away by investing in both Macys and AutoNation 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 Macys and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and AutoNation, you can compare the effects of market volatilities on Macys and AutoNation 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 Macys with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and AutoNation.
Diversification Opportunities for Macys and AutoNation
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macys and AutoNation is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and Macys 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 Macys Inc are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Macys i.e., Macys and AutoNation go up and down completely randomly.
Pair Corralation between Macys and AutoNation
Taking into account the 90-day investment horizon Macys Inc is expected to generate 1.66 times more return on investment than AutoNation. However, Macys is 1.66 times more volatile than AutoNation. It trades about 0.04 of its potential returns per unit of risk. AutoNation is currently generating about 0.0 per unit of risk. If you would invest 1,577 in Macys Inc on January 24, 2024 and sell it today you would earn a total of 298.00 from holding Macys Inc or generate 18.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
Macys Inc vs. AutoNation
Performance |
| Timeline |
| Macys Inc |
| AutoNation |
Macys and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macys and AutoNation
The main advantage of trading using opposite Macys and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Macys vs. Marks Spencer Group | Macys vs. Marks and Spencer | Macys vs. Dillards Capital Trust | Macys vs. Companhia Brasileira de |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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