Correlation Between Macys and Aeon

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Can any of the company-specific risk be diversified away by investing in both Macys and Aeon 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 Aeon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macys Inc and Aeon Ltd ADR, you can compare the effects of market volatilities on Macys and Aeon 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 Aeon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and Aeon.

Diversification Opportunities for Macys and Aeon

  Correlation Coefficient

Very weak diversification

The 3 months correlation between Macys and Aeon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Aeon Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon Ltd ADR 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 Aeon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Ltd ADR has no effect on the direction of Macys i.e., Macys and Aeon go up and down completely randomly.

Pair Corralation between Macys and Aeon

Taking into account the 90-day investment horizon Macys Inc is expected to generate 2.98 times more return on investment than Aeon. However, Macys is 2.98 times more volatile than Aeon Ltd ADR. It trades about 0.14 of its potential returns per unit of risk. Aeon Ltd ADR is currently generating about 0.33 per unit of risk. If you would invest  2,093  in Macys Inc on August 28, 2022 and sell it today you would earn a total of  272.00  from holding Macys Inc or generate 13.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Macys Inc  vs.  Aeon Ltd ADR

 Performance (%) 
Macys Inc 
Macys Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady primary indicators, Macys revealed solid returns over the last few months and may actually be approaching a breakup point.

Macys Price Channel

Aeon Ltd ADR 
Aeon Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aeon Ltd ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Aeon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aeon Price Channel

Macys and Aeon Volatility Contrast

   Predicted Return Density   

Pair Trading with Macys and Aeon

The main advantage of trading using opposite Macys and Aeon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, Aeon 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 Aeon will offset losses from the drop in Aeon's long position.
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The idea behind Macys Inc and Aeon Ltd ADR 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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