Correlation Between Macys and CSX

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Can any of the company-specific risk be diversified away by investing in both Macys and CSX 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 CSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and CSX Corporation, you can compare the effects of market volatilities on Macys and CSX 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 CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and CSX.

Diversification Opportunities for Macys and CSX

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Macys and CSX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Macys i.e., Macys and CSX go up and down completely randomly.

Pair Corralation between Macys and CSX

Taking into account the 90-day investment horizon Macys Inc is expected to generate 2.41 times more return on investment than CSX. However, Macys is 2.41 times more volatile than CSX Corporation. It trades about 0.01 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.02 per unit of risk. If you would invest  2,202  in Macys Inc on December 29, 2023 and sell it today you would lose (217.00) from holding Macys Inc or give up 9.85% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Macys Inc  vs.  CSX Corp.

 Performance 
       Timeline  
Macys Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Macys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Macys is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
CSX Corporation 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CSX may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Macys and CSX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Macys and CSX

The main advantage of trading using opposite Macys and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.
The idea behind Macys Inc and CSX Corporation 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.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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