Correlation Between Continental and Kirklands
Can any of the company-specific risk be diversified away by investing in both Continental and Kirklands 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 Continental and Kirklands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caleres and Kirklands, you can compare the effects of market volatilities on Continental and Kirklands 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 Continental with a short position of Kirklands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Kirklands.
Diversification Opportunities for Continental and Kirklands
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Continental and Kirklands is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Caleres and Kirklands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirklands and Continental 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 Caleres are associated (or correlated) with Kirklands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirklands has no effect on the direction of Continental i.e., Continental and Kirklands go up and down completely randomly.
Pair Corralation between Continental and Kirklands
Considering the 90-day investment horizon Caleres is expected to generate 0.66 times more return on investment than Kirklands. However, Caleres is 1.5 times less risky than Kirklands. It trades about 0.04 of its potential returns per unit of risk. Kirklands is currently generating about -0.02 per unit of risk. If you would invest 2,263 in Caleres on August 27, 2024 and sell it today you would earn a total of 889.00 from holding Caleres or generate 39.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caleres vs. Kirklands
Performance |
| Timeline |
| Continental |
| Kirklands |
Continental and Kirklands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental and Kirklands
The main advantage of trading using opposite Continental and Kirklands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental position performs unexpectedly, Kirklands 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 Kirklands will offset losses from the drop in Kirklands' long position.| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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