Correlation Between Macys and Alphabet

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

Diversification Opportunities for Macys and Alphabet

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Macys and Alphabet is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Alphabet Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of Macys i.e., Macys and Alphabet go up and down completely randomly.

Pair Corralation between Macys and Alphabet

Taking into account the 90-day investment horizon Macys Inc is expected to generate 2.43 times more return on investment than Alphabet. However, Macys is 2.43 times more volatile than Alphabet Class C. It trades about 0.12 of its potential returns per unit of risk. Alphabet Class C is currently generating about 0.3 per unit of risk. If you would invest  1,826  in Macys Inc on December 30, 2023 and sell it today you would earn a total of  173.00  from holding Macys Inc or generate 9.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Macys Inc  vs.  Alphabet Class C

 Performance 
       Timeline  
Macys Inc 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.
Alphabet Class C 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Class C are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Macys and Alphabet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Macys and Alphabet

The main advantage of trading using opposite Macys and Alphabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, Alphabet 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 Alphabet will offset losses from the drop in Alphabet's long position.
The idea behind Macys Inc and Alphabet Class C 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.
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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