Correlation Between Brilliant Earth and Continental
Can any of the company-specific risk be diversified away by investing in both Brilliant Earth and Continental 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 Brilliant Earth and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brilliant Earth Group and Caleres, you can compare the effects of market volatilities on Brilliant Earth and Continental 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 Brilliant Earth with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Earth and Continental.
Diversification Opportunities for Brilliant Earth and Continental
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brilliant and Continental is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Brilliant Earth 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 Brilliant Earth Group are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and Continental go up and down completely randomly.
Pair Corralation between Brilliant Earth and Continental
Given the investment horizon of 90 days Brilliant Earth Group is expected to under-perform the Continental. In addition to that, Brilliant Earth is 1.76 times more volatile than Caleres. It trades about -0.19 of its total potential returns per unit of risk. Caleres is currently generating about -0.04 per unit of volatility. If you would invest 1,716 in Caleres on December 6, 2024 and sell it today you would lose (42.00) from holding Caleres or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brilliant Earth Group vs. Caleres
Performance |
| Timeline |
| Brilliant Earth Group |
| Continental |
Brilliant Earth and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brilliant Earth and Continental
The main advantage of trading using opposite Brilliant Earth and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Earth position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| Brilliant Earth vs. Capri Holdings | Brilliant Earth vs. Movado Group | Brilliant Earth vs. Tapestry | Brilliant Earth vs. TheRealReal |
| Continental vs. Vera Bradley | Continental vs. Wolverine World Wide | Continental vs. Rocky Brands | Continental vs. Steven Madden |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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