Correlation Between MACYS and Where Food

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

By analyzing existing cross correlation between MACYS RETAIL HLDGS and Where Food Comes, you can compare the effects of market volatilities on MACYS and Where Food 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 Where Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACYS and Where Food.

Diversification Opportunities for MACYS and Where Food

-0.16

Correlation Coefficient

MACYS  Where Food

Good diversification

The 3 months correlation between MACYS and Where is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MACYS RETAIL HLDGS and Where Food Comes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Where Food Comes 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 RETAIL HLDGS are associated (or correlated) with Where Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Where Food Comes has no effect on the direction of MACYS i.e., MACYS and Where Food go up and down completely randomly.

Pair Corralation between MACYS and Where Food

Assuming the 90 days trading horizon MACYS RETAIL HLDGS is expected to under-perform the Where Food. But the bond apears to be less risky and, when comparing its historical volatility, MACYS RETAIL HLDGS is 1.43 times less risky than Where Food. The bond trades about -0.02 of its potential returns per unit of risk. The Where Food Comes is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,089  in Where Food Comes on September 24, 2024 and sell it today you would earn a total of  156.00  from holding Where Food Comes or generate 14.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.23%
Values	Daily Returns

MACYS RETAIL HLDGS  vs.  Where Food Comes

MACYS RETAIL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Where Food Comes

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with MACYS and Where Food

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

The idea behind MACYS RETAIL HLDGS and Where Food Comes 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.