Correlation Between Duluth Holdings and Cato
Can any of the company-specific risk be diversified away by investing in both Duluth Holdings and Cato 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 Duluth Holdings and Cato into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duluth Holdings and Cato Corporation, you can compare the effects of market volatilities on Duluth Holdings and Cato 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 Duluth Holdings with a short position of Cato. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duluth Holdings and Cato.
Diversification Opportunities for Duluth Holdings and Cato
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Duluth and Cato is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Duluth Holdings and Cato Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cato and Duluth Holdings 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 Duluth Holdings are associated (or correlated) with Cato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cato has no effect on the direction of Duluth Holdings i.e., Duluth Holdings and Cato go up and down completely randomly.
Pair Corralation between Duluth Holdings and Cato
Given the investment horizon of 90 days Duluth Holdings is expected to generate 0.5 times more return on investment than Cato. However, Duluth Holdings is 1.99 times less risky than Cato. It trades about -0.12 of its potential returns per unit of risk. Cato Corporation is currently generating about -0.14 per unit of risk. If you would invest 304.00 in Duluth Holdings on November 18, 2024 and sell it today you would lose (11.00) from holding Duluth Holdings or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duluth Holdings vs. Cato Corp.
Performance |
| Timeline |
| Duluth Holdings |
| Cato |
Duluth Holdings and Cato Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duluth Holdings and Cato
The main advantage of trading using opposite Duluth Holdings and Cato positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duluth Holdings position performs unexpectedly, Cato 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 Cato will offset losses from the drop in Cato's long position.| Duluth Holdings vs. Zumiez Inc | Duluth Holdings vs. JJill Inc | Duluth Holdings vs. Shoe Carnival | Duluth Holdings vs. Cato Corporation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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