Correlation Between Kontoor Brands and Cheer Holding
Can any of the company-specific risk be diversified away by investing in both Kontoor Brands and Cheer Holding 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 Kontoor Brands and Cheer Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kontoor Brands and Cheer Holding, you can compare the effects of market volatilities on Kontoor Brands and Cheer Holding 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 Kontoor Brands with a short position of Cheer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Cheer Holding.
Diversification Opportunities for Kontoor Brands and Cheer Holding
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kontoor and Cheer is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Cheer Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheer Holding and Kontoor Brands 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 Kontoor Brands are associated (or correlated) with Cheer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheer Holding has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and Cheer Holding go up and down completely randomly.
Pair Corralation between Kontoor Brands and Cheer Holding
Considering the 90-day investment horizon Kontoor Brands is expected to generate 0.85 times more return on investment than Cheer Holding. However, Kontoor Brands is 1.18 times less risky than Cheer Holding. It trades about 0.21 of its potential returns per unit of risk. Cheer Holding is currently generating about 0.07 per unit of risk. If you would invest 8,504 in Kontoor Brands on November 3, 2024 and sell it today you would earn a total of 681.00 from holding Kontoor Brands or generate 8.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kontoor Brands vs. Cheer Holding
Performance |
| Timeline |
| Kontoor Brands |
| Cheer Holding |
Kontoor Brands and Cheer Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kontoor Brands and Cheer Holding
The main advantage of trading using opposite Kontoor Brands and Cheer Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands position performs unexpectedly, Cheer Holding 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 Cheer Holding will offset losses from the drop in Cheer Holding's long position.| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
| Cheer Holding vs. American Vanguard | Cheer Holding vs. The Joint Corp | Cheer Holding vs. NL Industries | Cheer Holding vs. Xtant Medical Holdings |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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