Correlation Between Macys and 25160PAE7

Can any of the company-specific risk be diversified away by investing in both Macys and 25160PAE7 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 25160PAE7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Macys Inc and DEUTSCHE BK AG, you can compare the effects of market volatilities on Macys and 25160PAE7 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 25160PAE7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and 25160PAE7.

Diversification Opportunities for Macys and 25160PAE7

-0.37

Correlation Coefficient

Macys  25160PAE7

Very good diversification

The 3 months correlation between Macys and 25160PAE7 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and DEUTSCHE BK AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE BK AG 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 25160PAE7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE BK AG has no effect on the direction of Macys i.e., Macys and 25160PAE7 go up and down completely randomly.

Pair Corralation between Macys and 25160PAE7

Taking into account the 90-day investment horizon Macys Inc is expected to generate 4.97 times more return on investment than 25160PAE7. However, Macys is 4.97 times more volatile than DEUTSCHE BK AG. It trades about 0.1 of its potential returns per unit of risk. DEUTSCHE BK AG is currently generating about -0.19 per unit of risk. If you would invest  1,526  in Macys Inc on October 1, 2024 and sell it today you would earn a total of  228.00  from holding Macys Inc or generate 14.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.13%
Values	Daily Returns

Macys Inc  vs.  DEUTSCHE BK AG

Macys Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys displayed solid returns over the last few months and may actually be approaching a breakup point.

DEUTSCHE BK AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DEUTSCHE BK AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 25160PAE7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Macys and 25160PAE7

The main advantage of trading using opposite Macys and 25160PAE7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, 25160PAE7 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 25160PAE7 will offset losses from the drop in 25160PAE7's long position.

The idea behind Macys Inc and DEUTSCHE BK AG 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.