Correlation Between Card Factory and Tandy Leather
Can any of the company-specific risk be diversified away by investing in both Card Factory and Tandy Leather 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 Card Factory and Tandy Leather into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Card Factory plc and Tandy Leather Factory, you can compare the effects of market volatilities on Card Factory and Tandy Leather 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 Card Factory with a short position of Tandy Leather. Check out your portfolio center. Please also check ongoing floating volatility patterns of Card Factory and Tandy Leather.
Diversification Opportunities for Card Factory and Tandy Leather
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Card and Tandy is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory and Card Factory 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 Card Factory plc are associated (or correlated) with Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of Card Factory i.e., Card Factory and Tandy Leather go up and down completely randomly.
Pair Corralation between Card Factory and Tandy Leather
Assuming the 90 days horizon Card Factory plc is expected to under-perform the Tandy Leather. In addition to that, Card Factory is 1.39 times more volatile than Tandy Leather Factory. It trades about -0.25 of its total potential returns per unit of risk. Tandy Leather Factory is currently generating about 0.04 per unit of volatility. If you would invest 477.00 in Tandy Leather Factory on November 3, 2024 and sell it today you would earn a total of 10.00 from holding Tandy Leather Factory or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Card Factory plc vs. Tandy Leather Factory
Performance |
| Timeline |
| Card Factory plc |
| Tandy Leather Factory |
Card Factory and Tandy Leather Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Card Factory and Tandy Leather
The main advantage of trading using opposite Card Factory and Tandy Leather positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Card Factory position performs unexpectedly, Tandy Leather 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 Tandy Leather will offset losses from the drop in Tandy Leather's long position.| Card Factory vs. Ulta Beauty | Card Factory vs. Williams Sonoma | Card Factory vs. Dicks Sporting Goods | Card Factory vs. Best Buy Co |
| Tandy Leather vs. Green River Gold | Tandy Leather vs. Dixons Carphone plc | Tandy Leather vs. Ceconomy AG ADR | Tandy Leather vs. Winmark |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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