Correlation Between Stericycle and Macys
Can any of the company-specific risk be diversified away by investing in both Stericycle 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 Stericycle and Macys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stericycle and Macys Inc, you can compare the effects of market volatilities on Stericycle 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 Stericycle with a short position of Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stericycle and Macys.
Diversification Opportunities for Stericycle and Macys
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stericycle and Macys is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stericycle and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc and Stericycle 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 Stericycle 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 Stericycle i.e., Stericycle and Macys go up and down completely randomly.
Pair Corralation between Stericycle and Macys
Given the investment horizon of 90 days Stericycle is expected to under-perform the Macys. But the stock apears to be less risky and, when comparing its historical volatility, Stericycle is 1.9 times less risky than Macys. The stock trades about -0.22 of its potential returns per unit of risk. The Macys Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,908 in Macys Inc on January 26, 2024 and sell it today you would lose (35.00) from holding Macys Inc or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stericycle vs. Macys Inc
Performance |
| Timeline |
| Stericycle |
| Macys Inc |
Stericycle and Macys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stericycle and Macys
The main advantage of trading using opposite Stericycle and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stericycle 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.| Stericycle vs. Clean Harbors | Stericycle vs. Waste Connections | Stericycle vs. Casella Waste Systems | Stericycle vs. Montrose Environmental Grp |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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