Correlation Between Macys and Uber Technologies

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

By analyzing existing cross correlation between Macys Inc and Uber Technologies, you can compare the effects of market volatilities on Macys and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and Uber Technologies.

Diversification Opportunities for Macys and Uber Technologies

0.61

Correlation Coefficient

Macys  Uber Technologies

Poor diversification

The 3 months correlation between Macys and Uber is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Macys i.e., Macys and Uber Technologies go up and down completely randomly.

Pair Corralation between Macys and Uber Technologies

Taking into account the 90-day investment horizon Macys is expected to generate 1.07 times less return on investment than Uber Technologies. In addition to that, Macys is 1.17 times more volatile than Uber Technologies. It trades about 0.06 of its total potential returns per unit of risk. Uber Technologies is currently generating about 0.07 per unit of volatility. If you would invest  6,511  in Uber Technologies on January 19, 2024 and sell it today you would earn a total of  683.00  from holding Uber Technologies or generate 10.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Macys Inc  vs.  Uber Technologies

Macys Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Uber Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Macys and Uber Technologies

The main advantage of trading using opposite Macys and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.

The idea behind Macys Inc and Uber Technologies 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.