Correlation Between Express and T.J. Maxx

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Can any of the company-specific risk be diversified away by investing in both Express and T.J. Maxx 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 Express and T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Express and The TJX Companies, you can compare the effects of market volatilities on Express and T.J. Maxx 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 Express with a short position of T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Express and T.J. Maxx.

Diversification Opportunities for Express and T.J. Maxx

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Express and T.J. is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Express and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies and Express 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 Express are associated (or correlated) with T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Express i.e., Express and T.J. Maxx go up and down completely randomly.

Pair Corralation between Express and T.J. Maxx

Given the investment horizon of 90 days Express is expected to under-perform the T.J. Maxx. In addition to that, Express is 6.46 times more volatile than The TJX Companies. It trades about -0.12 of its total potential returns per unit of risk. The TJX Companies is currently generating about 0.09 per unit of volatility. If you would invest  7,889  in The TJX Companies on December 29, 2023 and sell it today you would earn a total of  2,256  from holding The TJX Companies or generate 28.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.52%
ValuesDaily Returns

Express  vs.  The TJX Companies

 Performance 
       Timeline  
Express 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
TJX Companies 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in The TJX Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward-looking indicators, T.J. Maxx may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Express and T.J. Maxx Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Express and T.J. Maxx

The main advantage of trading using opposite Express and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Express position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.
The idea behind Express and The TJX Companies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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