Correlation Between Macys and GBX International

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

By analyzing existing cross correlation between Macys Inc and GBX International Group, you can compare the effects of market volatilities on Macys and GBX International 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 GBX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and GBX International.

Diversification Opportunities for Macys and GBX International

0.42

Correlation Coefficient

Macys  GBX International

Very weak diversification

The 3 months correlation between Macys and GBX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and GBX International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBX International 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 GBX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBX International has no effect on the direction of Macys i.e., Macys and GBX International go up and down completely randomly.

Pair Corralation between Macys and GBX International

Taking into account the 90-day investment horizon Macys is expected to generate 399.35 times less return on investment than GBX International. But when comparing it to its historical volatility, Macys Inc is 31.19 times less risky than GBX International. It trades about 0.01 of its potential returns per unit of risk. GBX International Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7.60  in GBX International Group on September 28, 2024 and sell it today you would lose (7.58) from holding GBX International Group or give up 99.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Macys Inc  vs.  GBX International Group

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GBX International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GBX International Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, GBX International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macys and GBX International

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

The idea behind Macys Inc and GBX International Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.