Correlation Between Target and Fossil

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

Diversification Opportunities for Target and Fossil

-0.8
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Target and Fossil is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Target and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group and Target 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 Target are associated (or correlated) with Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Target i.e., Target and Fossil go up and down completely randomly.

Pair Corralation between Target and Fossil

Considering the 90-day investment horizon Target is expected to generate 0.58 times more return on investment than Fossil. However, Target is 1.73 times less risky than Fossil. It trades about 0.23 of its potential returns per unit of risk. Fossil Group is currently generating about -0.07 per unit of risk. If you would invest  15,199  in Target on December 29, 2023 and sell it today you would earn a total of  2,268  from holding Target or generate 14.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Target  vs.  Fossil Group

 Performance 
       Timeline  
Target 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Target unveiled solid returns over the last few months and may actually be approaching a breakup point.
Fossil Group 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Fossil Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Target and Fossil Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Target and Fossil

The main advantage of trading using opposite Target and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, Fossil 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 Fossil will offset losses from the drop in Fossil's long position.
The idea behind Target and Fossil Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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