Correlation Between Lands End and Cato
Can any of the company-specific risk be diversified away by investing in both Lands End 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 Lands End and Cato into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lands End and Cato Corporation, you can compare the effects of market volatilities on Lands End 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 Lands End with a short position of Cato. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lands End and Cato.
Diversification Opportunities for Lands End and Cato
Weak diversification
The 3 months correlation between Lands and Cato is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and Cato Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cato and Lands End 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 Lands End 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 Lands End i.e., Lands End and Cato go up and down completely randomly.
Pair Corralation between Lands End and Cato
Allowing for the 90-day total investment horizon Lands End is expected to generate 0.33 times more return on investment than Cato. However, Lands End is 3.02 times less risky than Cato. It trades about -0.05 of its potential returns per unit of risk. Cato Corporation is currently generating about -0.33 per unit of risk. If you would invest 1,672 in Lands End on August 27, 2024 and sell it today you would lose (51.00) from holding Lands End or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lands End vs. Cato Corp.
Performance |
| Timeline |
| Lands End |
| Cato |
Lands End and Cato Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lands End and Cato
The main advantage of trading using opposite Lands End and Cato positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End 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.| Lands End vs. Tillys Inc | Lands End vs. Zumiez Inc | Lands End vs. Citi Trends | Lands End 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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