Correlation Between Universal Technical and MACYS

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

By analyzing existing cross correlation between Universal Technical Institute and MACYS RETAIL HLDGS, you can compare the effects of market volatilities on Universal Technical 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 Universal Technical with a short position of MACYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Technical and MACYS.

Diversification Opportunities for Universal Technical and MACYS

-0.15

Correlation Coefficient

Universal Technical  MACYS

Good diversification

The 3 months correlation between Universal and MACYS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and MACYS RETAIL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACYS RETAIL HLDGS and Universal Technical 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 Universal Technical Institute 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 RETAIL HLDGS has no effect on the direction of Universal Technical i.e., Universal Technical and MACYS go up and down completely randomly.

Pair Corralation between Universal Technical and MACYS

Considering the 90-day investment horizon Universal Technical Institute is expected to generate 3.37 times more return on investment than MACYS. However, Universal Technical is 3.37 times more volatile than MACYS RETAIL HLDGS. It trades about -0.02 of its potential returns per unit of risk. MACYS RETAIL HLDGS is currently generating about -0.11 per unit of risk. If you would invest  2,594  in Universal Technical Institute on September 26, 2024 and sell it today you would lose (50.00) from holding Universal Technical Institute or give up 1.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Universal Technical Institute  vs.  MACYS RETAIL HLDGS

Universal Technical

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Universal Technical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal Technical and MACYS

The main advantage of trading using opposite Universal Technical and MACYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Technical 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's long position.

The idea behind Universal Technical Institute and MACYS RETAIL HLDGS 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.