Correlation Between Industria and Foot Locker

Can any of the company-specific risk be diversified away by investing in both Industria and Foot Locker 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 Industria and Foot Locker into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Industria de Diseno and Foot Locker, you can compare the effects of market volatilities on Industria and Foot Locker 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 Industria with a short position of Foot Locker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and Foot Locker.

Diversification Opportunities for Industria and Foot Locker

0.08

Correlation Coefficient

Industria  Foot Locker

Significant diversification

The 3 months correlation between Industria and Foot is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Foot Locker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foot Locker and Industria 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 Industria de Diseno are associated (or correlated) with Foot Locker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foot Locker has no effect on the direction of Industria i.e., Industria and Foot Locker go up and down completely randomly.

Pair Corralation between Industria and Foot Locker

Assuming the 90 days horizon Industria de Diseno is expected to under-perform the Foot Locker. But the pink sheet apears to be less risky and, when comparing its historical volatility, Industria de Diseno is 6.67 times less risky than Foot Locker. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Foot Locker is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,186  in Foot Locker on May 7, 2025 and sell it today you would earn a total of  1,300  from holding Foot Locker or generate 109.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Industria de Diseno  vs.  Foot Locker

Industria de Diseno

Risk-Adjusted Performance

Weakest

Over the last 90 days Industria de Diseno has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Foot Locker

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Foot Locker are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Foot Locker disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Industria and Foot Locker

The main advantage of trading using opposite Industria and Foot Locker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria position performs unexpectedly, Foot Locker 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 Foot Locker will offset losses from the drop in Foot Locker's long position.

The idea behind Industria de Diseno and Foot Locker 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.