Correlation Between Macys and PPL
Can any of the company-specific risk be diversified away by investing in both Macys and PPL 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 PPL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and PPL Corporation, you can compare the effects of market volatilities on Macys and PPL 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 PPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and PPL.
Diversification Opportunities for Macys and PPL
Very weak diversification
The 3 months correlation between Macys and PPL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation 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 PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of Macys i.e., Macys and PPL go up and down completely randomly.
Pair Corralation between Macys and PPL
Taking into account the 90-day investment horizon Macys Inc is expected to under-perform the PPL. In addition to that, Macys is 1.89 times more volatile than PPL Corporation. It trades about -0.08 of its total potential returns per unit of risk. PPL Corporation is currently generating about 0.03 per unit of volatility. If you would invest 2,706 in PPL Corporation on January 25, 2024 and sell it today you would earn a total of 18.00 from holding PPL Corporation or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macys Inc vs. PPL Corp.
Performance |
| Timeline |
| Macys Inc |
| PPL Corporation |
Macys and PPL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macys and PPL
The main advantage of trading using opposite Macys and PPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, PPL 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 PPL will offset losses from the drop in PPL's long position.| Macys vs. Marks Spencer Group | Macys vs. Marks and Spencer | Macys vs. Dillards Capital Trust | Macys vs. Companhia Brasileira de |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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