Correlation Between Abercrombie Fitch and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both Abercrombie Fitch and Shoe Carnival 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 Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abercrombie Fitch and Shoe Carnival, you can compare the effects of market volatilities on Abercrombie Fitch and Shoe Carnival 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 Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abercrombie Fitch and Shoe Carnival.
Diversification Opportunities for Abercrombie Fitch and Shoe Carnival
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Abercrombie and Shoe is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Abercrombie Fitch and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival 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 Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of Abercrombie Fitch i.e., Abercrombie Fitch and Shoe Carnival go up and down completely randomly.
Pair Corralation between Abercrombie Fitch and Shoe Carnival
Considering the 90-day investment horizon Abercrombie Fitch is expected to generate 1.25 times more return on investment than Shoe Carnival. However, Abercrombie Fitch is 1.25 times more volatile than Shoe Carnival. It trades about 0.04 of its potential returns per unit of risk. Shoe Carnival is currently generating about -0.11 per unit of risk. If you would invest 14,782 in Abercrombie Fitch on August 24, 2024 and sell it today you would earn a total of 247.00 from holding Abercrombie Fitch or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abercrombie Fitch vs. Shoe Carnival
Performance |
| Timeline |
| Abercrombie Fitch |
| Shoe Carnival |
Abercrombie Fitch and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abercrombie Fitch and Shoe Carnival
The main advantage of trading using opposite Abercrombie Fitch and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abercrombie Fitch position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.| Abercrombie Fitch vs. Urban Outfitters | Abercrombie Fitch vs. Foot Locker | Abercrombie Fitch vs. Childrens Place | Abercrombie Fitch vs. American Eagle Outfitters |
| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival vs. Cato Corporation |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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