Correlation Between Jeffs Brands and Foot Locker

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

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

Diversification Opportunities for Jeffs Brands and Foot Locker

-0.32

Correlation Coefficient

Jeffs Brands  Foot Locker

Very good diversification

The 3 months correlation between Jeffs and Foot is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Jeffs Brands and Foot Locker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foot Locker and Jeffs Brands 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 Jeffs Brands 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 Jeffs Brands i.e., Jeffs Brands and Foot Locker go up and down completely randomly.

Pair Corralation between Jeffs Brands and Foot Locker

Given the investment horizon of 90 days Jeffs Brands is expected to generate 46.65 times more return on investment than Foot Locker. However, Jeffs Brands is 46.65 times more volatile than Foot Locker. It trades about 0.13 of its potential returns per unit of risk. Foot Locker is currently generating about -0.07 per unit of risk. If you would invest  21.00  in Jeffs Brands on September 1, 2024 and sell it today you would earn a total of  246.00  from holding Jeffs Brands or generate 1171.43% return on investment over 90 days.

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

Jeffs Brands  vs.  Foot Locker

Jeffs Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeffs Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Jeffs Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Foot Locker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foot Locker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Jeffs Brands and Foot Locker

The main advantage of trading using opposite Jeffs Brands and Foot Locker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeffs Brands 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 Jeffs Brands 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.