Correlation Between Expand Energy and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both Expand Energy and Shoe Carnival 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 Expand Energy and Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Expand Energy and Shoe Carnival, you can compare the effects of market volatilities on Expand Energy and Shoe Carnival 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 Expand Energy with a short position of Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expand Energy and Shoe Carnival.
Diversification Opportunities for Expand Energy and Shoe Carnival
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Expand and Shoe is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Expand Energy and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival and Expand Energy 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 Expand Energy are associated (or correlated) with Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of Expand Energy i.e., Expand Energy and Shoe Carnival go up and down completely randomly.
Pair Corralation between Expand Energy and Shoe Carnival
Considering the 90-day investment horizon Expand Energy is expected to generate 0.65 times more return on investment than Shoe Carnival. However, Expand Energy is 1.53 times less risky than Shoe Carnival. It trades about 0.29 of its potential returns per unit of risk. Shoe Carnival is currently generating about -0.05 per unit of risk. If you would invest 7,176 in Expand Energy on September 2, 2024 and sell it today you would earn a total of 2,720 from holding Expand Energy or generate 37.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Expand Energy vs. Shoe Carnival
Performance |
| Timeline |
| Expand Energy |
| Shoe Carnival |
Expand Energy and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Expand Energy and Shoe Carnival
The main advantage of trading using opposite Expand Energy and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expand Energy position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.| Expand Energy vs. Dine Brands Global | Expand Energy vs. Playa Hotels Resorts | Expand Energy vs. Meli Hotels International | Expand Energy vs. Analog Devices |
| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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