Correlation Between Carters and Tillys
Can any of the company-specific risk be diversified away by investing in both Carters and Tillys 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 Tillys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carters and Tillys Inc, you can compare the effects of market volatilities on Carters and Tillys 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 Tillys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carters and Tillys.
Diversification Opportunities for Carters and Tillys
Poor diversification
The 3 months correlation between Carters and Tillys is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys Inc 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 Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Carters i.e., Carters and Tillys go up and down completely randomly.
Pair Corralation between Carters and Tillys
Considering the 90-day investment horizon Carters is expected to generate 0.64 times more return on investment than Tillys. However, Carters is 1.56 times less risky than Tillys. It trades about -0.01 of its potential returns per unit of risk. Tillys Inc is currently generating about -0.04 per unit of risk. If you would invest 6,650 in Carters on September 2, 2024 and sell it today you would lose (1,193) from holding Carters or give up 17.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carters vs. Tillys Inc
Performance |
| Timeline |
| Carters |
| Tillys Inc |
Carters and Tillys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carters and Tillys
The main advantage of trading using opposite Carters and Tillys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carters position performs unexpectedly, Tillys 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 Tillys will offset losses from the drop in Tillys' long position.| Carters vs. Childrens Place | Carters vs. Gildan Activewear | Carters vs. Oxford Industries | Carters vs. Columbia Sportswear |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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