Correlation Between Carters and Childrens Place
Can any of the company-specific risk be diversified away by investing in both Carters and Childrens Place 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 Childrens Place into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carters and Childrens Place, you can compare the effects of market volatilities on Carters and Childrens Place 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 Childrens Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carters and Childrens Place.
Diversification Opportunities for Carters and Childrens Place
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carters and Childrens is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Childrens Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Childrens Place 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 Childrens Place. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Childrens Place has no effect on the direction of Carters i.e., Carters and Childrens Place go up and down completely randomly.
Pair Corralation between Carters and Childrens Place
Considering the 90-day investment horizon Carters is expected to under-perform the Childrens Place. But the stock apears to be less risky and, when comparing its historical volatility, Carters is 1.36 times less risky than Childrens Place. The stock trades about -0.04 of its potential returns per unit of risk. The Childrens Place is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,045 in Childrens Place on October 20, 2024 and sell it today you would lose (10.00) from holding Childrens Place or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Carters vs. Childrens Place
Performance |
| Timeline |
| Carters |
| Childrens Place |
Carters and Childrens Place Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carters and Childrens Place
The main advantage of trading using opposite Carters and Childrens Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carters position performs unexpectedly, Childrens Place 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 Childrens Place will offset losses from the drop in Childrens Place's long position.| Carters vs. Childrens Place | Carters vs. Gildan Activewear | Carters vs. Oxford Industries | Carters vs. Columbia Sportswear |
| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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