Correlation Between Under Armour and Xcel Brands

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

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

Diversification Opportunities for Under Armour and Xcel Brands

-0.28

Correlation Coefficient

Under Armour  Xcel Brands

Very good diversification

The 3 months correlation between Under and Xcel is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour A and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Brands and Under Armour 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 Under Armour A are associated (or correlated) with Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of Under Armour i.e., Under Armour and Xcel Brands go up and down completely randomly.

Pair Corralation between Under Armour and Xcel Brands

Considering the 90-day investment horizon Under Armour A is expected to generate 1.8 times more return on investment than Xcel Brands. However, Under Armour is 1.8 times more volatile than Xcel Brands. It trades about 0.06 of its potential returns per unit of risk. Xcel Brands is currently generating about -0.07 per unit of risk. If you would invest  792.00  in Under Armour A on September 15, 2024 and sell it today you would earn a total of  89.00  from holding Under Armour A or generate 11.24% return on investment over 90 days.

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

Under Armour A  vs.  Xcel Brands

Under Armour A

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Under Armour sustained solid returns over the last few months and may actually be approaching a breakup point.

Xcel Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xcel Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Under Armour and Xcel Brands

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

The idea behind Under Armour A and Xcel Brands 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.