Correlation Between Macys and LL Flooring
Can any of the company-specific risk be diversified away by investing in both Macys and LL Flooring 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 LL Flooring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and LL Flooring Holdings, you can compare the effects of market volatilities on Macys and LL Flooring 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 LL Flooring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and LL Flooring.
Diversification Opportunities for Macys and LL Flooring
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Macys and LL Flooring is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and LL Flooring Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LL Flooring Holdings 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 LL Flooring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LL Flooring Holdings has no effect on the direction of Macys i.e., Macys and LL Flooring go up and down completely randomly.
Pair Corralation between Macys and LL Flooring
Taking into account the 90-day investment horizon Macys Inc is expected to generate 1.21 times more return on investment than LL Flooring. However, Macys is 1.21 times more volatile than LL Flooring Holdings. It trades about -0.03 of its potential returns per unit of risk. LL Flooring Holdings is currently generating about -0.42 per unit of risk. If you would invest 1,908 in Macys Inc on January 26, 2024 and sell it today you would lose (35.00) from holding Macys Inc or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macys Inc vs. LL Flooring Holdings
Performance |
| Timeline |
| Macys Inc |
| LL Flooring Holdings |
Macys and LL Flooring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macys and LL Flooring
The main advantage of trading using opposite Macys and LL Flooring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, LL Flooring 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 LL Flooring will offset losses from the drop in LL Flooring's long position.| Macys vs. Marks Spencer Group | Macys vs. Marks and Spencer | Macys vs. Dillards Capital Trust | Macys vs. Companhia Brasileira de |
| LL Flooring vs. Haverty Furniture Companies | LL Flooring vs. Arhaus Inc | LL Flooring vs. Tile Shop Holdings | LL Flooring vs. Floor Decor Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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