Correlation Between Chewy and Kohls Corp
Can any of the company-specific risk be diversified away by investing in both Chewy and Kohls Corp 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 Chewy and Kohls Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chewy Inc and Kohls Corp, you can compare the effects of market volatilities on Chewy and Kohls Corp 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 Chewy with a short position of Kohls Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chewy and Kohls Corp.
Diversification Opportunities for Chewy and Kohls Corp
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chewy and Kohls is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Chewy Inc and Kohls Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohls Corp and Chewy 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 Chewy Inc are associated (or correlated) with Kohls Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohls Corp has no effect on the direction of Chewy i.e., Chewy and Kohls Corp go up and down completely randomly.
Pair Corralation between Chewy and Kohls Corp
Given the investment horizon of 90 days Chewy Inc is expected to generate 0.62 times more return on investment than Kohls Corp. However, Chewy Inc is 1.62 times less risky than Kohls Corp. It trades about 0.34 of its potential returns per unit of risk. Kohls Corp is currently generating about -0.19 per unit of risk. If you would invest 2,669 in Chewy Inc on August 30, 2024 and sell it today you would earn a total of 664.00 from holding Chewy Inc or generate 24.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chewy Inc vs. Kohls Corp
Performance |
| Timeline |
| Chewy Inc |
| Kohls Corp |
Chewy and Kohls Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chewy and Kohls Corp
The main advantage of trading using opposite Chewy and Kohls Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chewy position performs unexpectedly, Kohls Corp 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 Kohls Corp will offset losses from the drop in Kohls Corp's long position.The idea behind Chewy Inc and Kohls Corp 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.| Kohls Corp vs. Nordstrom | Kohls Corp vs. Dillards | Kohls Corp vs. Marks Spencer Group | Kohls Corp vs. Marks and Spencer |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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