Correlation Between Abercrombie Fitch and Buckle

By analyzing existing cross correlation between Abercrombie Fitch and Buckle Inc, you can compare the effects of market volatilities on Abercrombie Fitch and Buckle 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 Abercrombie Fitch with a short position of Buckle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abercrombie Fitch and Buckle.

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Can any of the company-specific risk be diversified away by investing in both Abercrombie Fitch and Buckle 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 Abercrombie Fitch and Buckle into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for Abercrombie Fitch and Buckle

0.6
  Correlation Coefficient
Abercrombie Fitch
Buckle Inc

Poor diversification

The 3 months correlation between Abercrombie and Buckle is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Abercrombie Fitch and Buckle Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc and Abercrombie Fitch 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 Abercrombie Fitch are associated (or correlated) with Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of Abercrombie Fitch i.e., Abercrombie Fitch and Buckle go up and down completely randomly.

Pair Corralation between Abercrombie Fitch and Buckle

Considering the 90-day investment horizon Abercrombie Fitch is expected to under-perform the Buckle. But the stock apears to be less risky and, when comparing its historical volatility, Abercrombie Fitch is 1.15 times less risky than Buckle. The stock trades about -0.4 of its potential returns per unit of risk. The Buckle Inc is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest  4,975  in Buckle Inc on May 1, 2021 and sell it today you would lose (767.00)  from holding Buckle Inc or give up 15.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Abercrombie Fitch  vs.  Buckle Inc

 Performance (%) 
      Timeline 
Abercrombie Fitch 
 Abercrombie Performance
0 of 100
Over the last 90 days Abercrombie Fitch has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Abercrombie Fitch is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Abercrombie Price Channel

Buckle Inc 
 Buckle Performance
0 of 100
Over the last 90 days Buckle Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Buckle is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Buckle Price Channel

Abercrombie Fitch and Buckle Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Abercrombie Fitch and Buckle

The main advantage of trading using opposite Abercrombie Fitch and Buckle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abercrombie Fitch position performs unexpectedly, Buckle 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 Buckle will offset losses from the drop in Buckle's long position.
The idea behind Abercrombie Fitch and Buckle Inc 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.
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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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