Correlation Between Rite Aid and Fossil
Can any of the company-specific risk be diversified away by investing in both Rite Aid 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 Rite Aid and Fossil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rite Aid and Fossil Group, you can compare the effects of market volatilities on Rite Aid 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 Rite Aid with a short position of Fossil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rite Aid and Fossil.
Diversification Opportunities for Rite Aid and Fossil
Poor diversification
The 3 months correlation between Rite and Fossil is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rite Aid and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group and Rite Aid 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 Rite Aid 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 Rite Aid i.e., Rite Aid and Fossil go up and down completely randomly.
Pair Corralation between Rite Aid and Fossil
Considering the 90-day investment horizon Rite Aid is expected to under-perform the Fossil. In addition to that, Rite Aid is 1.74 times more volatile than Fossil Group. It trades about -0.05 of its total potential returns per unit of risk. Fossil Group is currently generating about -0.08 per unit of volatility. If you would invest 934.00 in Fossil Group on January 25, 2024 and sell it today you would lose (853.28) from holding Fossil Group or give up 91.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.42% |
| Values | Daily Returns |
Rite Aid vs. Fossil Group
Performance |
| Timeline |
| Rite Aid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fossil Group |
Rite Aid and Fossil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rite Aid and Fossil
The main advantage of trading using opposite Rite Aid and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rite Aid 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.| Rite Aid vs. PetMed Express | Rite Aid vs. High Tide | Rite Aid vs. China Jo Jo Drugstores | Rite Aid vs. Bimi International Medical |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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