Correlation Between Macys and International Paper
Can any of the company-specific risk be diversified away by investing in both Macys and International Paper 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 Macys and International Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and International Paper, you can compare the effects of market volatilities on Macys and International Paper 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 Macys with a short position of International Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and International Paper.
Diversification Opportunities for Macys and International Paper
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Macys and International is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper and Macys 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 Macys Inc are associated (or correlated) with International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of Macys i.e., Macys and International Paper go up and down completely randomly.
Pair Corralation between Macys and International Paper
Taking into account the 90-day investment horizon Macys Inc is expected to generate 1.13 times more return on investment than International Paper. However, Macys is 1.13 times more volatile than International Paper. It trades about -0.2 of its potential returns per unit of risk. International Paper is currently generating about -0.23 per unit of risk. If you would invest 2,120 in Macys Inc on January 20, 2024 and sell it today you would lose (216.00) from holding Macys Inc or give up 10.19% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Macys Inc vs. International Paper
Performance |
Timeline |
Macys Inc |
International Paper |
Macys and International Paper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Macys and International Paper
The main advantage of trading using opposite Macys and International Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, International Paper 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 International Paper will offset losses from the drop in International Paper's long position.Macys vs. Marks Spencer Group | Macys vs. Marks and Spencer | Macys vs. Dillards Capital Trust | Macys vs. Companhia Brasileira de |
International Paper vs. Reynolds Consumer Products | International Paper vs. Ball Corporation | International Paper vs. Crown Holdings | International Paper vs. Myers Industries |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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