Correlation Between Arhaus and Cato
Can any of the company-specific risk be diversified away by investing in both Arhaus and Cato 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 Arhaus and Cato into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arhaus Inc and Cato Corporation, you can compare the effects of market volatilities on Arhaus and Cato 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 Arhaus with a short position of Cato. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and Cato.
Diversification Opportunities for Arhaus and Cato
Pay attention - limited upside
The 3 months correlation between Arhaus and Cato is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Cato Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cato and Arhaus 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 Arhaus Inc are associated (or correlated) with Cato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cato has no effect on the direction of Arhaus i.e., Arhaus and Cato go up and down completely randomly.
Pair Corralation between Arhaus and Cato
Given the investment horizon of 90 days Arhaus Inc is expected to generate 1.27 times more return on investment than Cato. However, Arhaus is 1.27 times more volatile than Cato Corporation. It trades about 0.03 of its potential returns per unit of risk. Cato Corporation is currently generating about -0.04 per unit of risk. If you would invest 923.00 in Arhaus Inc on August 28, 2024 and sell it today you would earn a total of 144.00 from holding Arhaus Inc or generate 15.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arhaus Inc vs. Cato Corp.
Performance |
| Timeline |
| Arhaus Inc |
| Cato |
Arhaus and Cato Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arhaus and Cato
The main advantage of trading using opposite Arhaus and Cato positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus position performs unexpectedly, Cato 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 Cato will offset losses from the drop in Cato's long position.| Arhaus vs. Floor Decor Holdings | Arhaus vs. Live Ventures | Arhaus vs. Haverty Furniture Companies | Arhaus vs. Home Depot |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |