Correlation Between Macys and IShares US
Can any of the company-specific risk be diversified away by investing in both Macys and IShares US 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 IShares US into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and IShares US Technology, you can compare the effects of market volatilities on Macys and IShares US 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 IShares US. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and IShares US.
Diversification Opportunities for Macys and IShares US
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Macys and IShares is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and IShares US Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares US Technology 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 IShares US. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares US Technology has no effect on the direction of Macys i.e., Macys and IShares US go up and down completely randomly.
Pair Corralation between Macys and IShares US
Taking into account the 90-day investment horizon Macys Inc is expected to generate 3.48 times more return on investment than IShares US. However, Macys is 3.48 times more volatile than IShares US Technology. It trades about 0.12 of its potential returns per unit of risk. IShares US Technology is currently generating about 0.11 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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Macys Inc vs. IShares US Technology
Performance |
Timeline |
Macys Inc |
IShares US Technology |
Macys and IShares US Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macys and IShares US
The main advantage of trading using opposite Macys and IShares US positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, IShares US 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 IShares US will offset losses from the drop in IShares US's long position.The idea behind Macys Inc and IShares US Technology 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.IShares US vs. Vanguard Information Technology | IShares US vs. IShares Semiconductor ETF | IShares US vs. First Trust NASDAQ | IShares US vs. First Trust Dow |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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