Correlation Between Oxford Industries and Ree Automotive

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

By analyzing existing cross correlation between Oxford Industries and Ree Automotive Holding, you can compare the effects of market volatilities on Oxford Industries and Ree Automotive 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 Oxford Industries with a short position of Ree Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oxford Industries and Ree Automotive.

Diversification Opportunities for Oxford Industries and Ree Automotive

-0.57

Correlation Coefficient

Oxford Industries  Ree Automotive

Excellent diversification

The 3 months correlation between Oxford and Ree is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Industries and Ree Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ree Automotive Holding and Oxford Industries 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 Oxford Industries are associated (or correlated) with Ree Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ree Automotive Holding has no effect on the direction of Oxford Industries i.e., Oxford Industries and Ree Automotive go up and down completely randomly.

Pair Corralation between Oxford Industries and Ree Automotive

Considering the 90-day investment horizon Oxford Industries is expected to under-perform the Ree Automotive. But the stock apears to be less risky and, when comparing its historical volatility, Oxford Industries is 4.6 times less risky than Ree Automotive. The stock trades about -0.02 of its potential returns per unit of risk. The Ree Automotive Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  330.00  in Ree Automotive Holding on September 3, 2024 and sell it today you would earn a total of  443.00  from holding Ree Automotive Holding or generate 134.24% return on investment over 90 days.

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

Oxford Industries  vs.  Ree Automotive Holding

Oxford Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Oxford Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ree Automotive Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ree Automotive Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Ree Automotive exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oxford Industries and Ree Automotive

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

The idea behind Oxford Industries and Ree Automotive Holding 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.