Correlation Between Sun Art and Macys

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

By analyzing existing cross correlation between Sun Art Retail and Macys Inc, you can compare the effects of market volatilities on Sun Art and Macys 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 Sun Art with a short position of Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Art and Macys.

Diversification Opportunities for Sun Art and Macys

0.89

Correlation Coefficient

Sun Art  Macys

Very poor diversification

The 3 months correlation between Sun and Macys is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sun Art Retail and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and Sun Art 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 Sun Art Retail are associated (or correlated) with Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Sun Art i.e., Sun Art and Macys go up and down completely randomly.

Pair Corralation between Sun Art and Macys

Assuming the 90 days horizon Sun Art Retail is expected to generate 2.2 times more return on investment than Macys. However, Sun Art is 2.2 times more volatile than Macys Inc. It trades about 0.27 of its potential returns per unit of risk. Macys Inc is currently generating about 0.12 per unit of risk. If you would invest  15.00  in Sun Art Retail on September 23, 2024 and sell it today you would earn a total of  16.00  from holding Sun Art Retail or generate 106.67% return on investment over 90 days.

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

Sun Art Retail  vs.  Macys Inc

Sun Art Retail

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Art Retail are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Art reported solid returns over the last few months and may actually be approaching a breakup point.

Macys Inc

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Sun Art and Macys

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

The idea behind Sun Art Retail and Macys Inc 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.