Correlation Between Pacific Biosciences and Macys

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

Diversification Opportunities for Pacific Biosciences and Macys

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Pacific and Macys is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Biosciences Of and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and Pacific Biosciences 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 Pacific Biosciences 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 Inc has no effect on the direction of Pacific Biosciences i.e., Pacific Biosciences and Macys go up and down completely randomly.

Pair Corralation between Pacific Biosciences and Macys

Given the investment horizon of 90 days Pacific Biosciences is expected to under-perform the Macys. In addition to that, Pacific Biosciences is 1.19 times more volatile than Macys Inc. It trades about -0.33 of its total potential returns per unit of risk. Macys Inc is currently generating about 0.03 per unit of volatility. If you would invest  1,978  in Macys Inc on December 29, 2023 and sell it today you would earn a total of  21.00  from holding Macys Inc or generate 1.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pacific Biosciences Of  vs.  Macys Inc

 Performance 
       Timeline  
Pacific Biosciences 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Pacific Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Macys Inc 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Macys is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pacific Biosciences and Macys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pacific Biosciences and Macys

The main advantage of trading using opposite Pacific Biosciences and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Biosciences 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' long position.
The idea behind Pacific Biosciences and Macys Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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