Correlation Between Foot Locker and Bon-Ton Stores

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

Diversification Opportunities for Foot Locker and Bon-Ton Stores

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Foot and Bon-Ton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Foot Locker and The Bon-Ton Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon-Ton Stores and Foot Locker 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 Foot Locker are associated (or correlated) with Bon-Ton Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon-Ton Stores has no effect on the direction of Foot Locker i.e., Foot Locker and Bon-Ton Stores go up and down completely randomly.

Pair Corralation between Foot Locker and Bon-Ton Stores

If you would invest (100.00) in The Bon Ton Stores on December 29, 2023 and sell it today you would earn a total of  100.00  from holding The Bon Ton Stores or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Foot Locker  vs.  The Bon-Ton Stores

 Performance 
       Timeline  
Foot Locker 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Foot Locker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Foot Locker is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
Bon-Ton Stores 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days The Bon Ton Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bon-Ton Stores is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Foot Locker and Bon-Ton Stores Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Foot Locker and Bon-Ton Stores

The main advantage of trading using opposite Foot Locker and Bon-Ton Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foot Locker position performs unexpectedly, Bon-Ton Stores 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 Bon-Ton Stores will offset losses from the drop in Bon-Ton Stores' long position.
The idea behind Foot Locker and The Bon Ton Stores 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 CEOs Directory module to screen CEOs from public companies around the world.

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