Correlation Between Carters and Malibu Boats
Can any of the company-specific risk be diversified away by investing in both Carters and Malibu Boats 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 Carters and Malibu Boats into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carters and Malibu Boats, you can compare the effects of market volatilities on Carters and Malibu Boats 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 Carters with a short position of Malibu Boats. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carters and Malibu Boats.
Diversification Opportunities for Carters and Malibu Boats
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carters and Malibu is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats and Carters 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 Carters are associated (or correlated) with Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of Carters i.e., Carters and Malibu Boats go up and down completely randomly.
Pair Corralation between Carters and Malibu Boats
Considering the 90-day investment horizon Carters is expected to under-perform the Malibu Boats. In addition to that, Carters is 1.54 times more volatile than Malibu Boats. It trades about -0.26 of its total potential returns per unit of risk. Malibu Boats is currently generating about -0.3 per unit of volatility. If you would invest 3,730 in Malibu Boats on December 6, 2024 and sell it today you would lose (581.50) from holding Malibu Boats or give up 15.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carters vs. Malibu Boats
Performance |
| Timeline |
| Carters |
| Malibu Boats |
Carters and Malibu Boats Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carters and Malibu Boats
The main advantage of trading using opposite Carters and Malibu Boats positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carters position performs unexpectedly, Malibu Boats 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 Malibu Boats will offset losses from the drop in Malibu Boats' long position.| Carters vs. Childrens Place | Carters vs. Gildan Activewear | Carters vs. Oxford Industries | Carters vs. Columbia Sportswear |
| Malibu Boats vs. Polaris Industries | Malibu Boats vs. MCBC Holdings | Malibu Boats vs. LCI Industries | Malibu Boats vs. Thor Industries |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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