Correlation Between Childrens Place and Continental
Can any of the company-specific risk be diversified away by investing in both Childrens Place and Continental 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 Childrens Place and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Childrens Place and Caleres, you can compare the effects of market volatilities on Childrens Place and Continental 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 Childrens Place with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Childrens Place and Continental.
Diversification Opportunities for Childrens Place and Continental
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Childrens and Continental is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Childrens Place 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 Childrens Place are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Childrens Place i.e., Childrens Place and Continental go up and down completely randomly.
Pair Corralation between Childrens Place and Continental
Given the investment horizon of 90 days Childrens Place is expected to generate 1.81 times more return on investment than Continental. However, Childrens Place is 1.81 times more volatile than Caleres. It trades about 0.14 of its potential returns per unit of risk. Caleres is currently generating about 0.07 per unit of risk. If you would invest 1,437 in Childrens Place on August 31, 2024 and sell it today you would earn a total of 178.00 from holding Childrens Place or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Childrens Place vs. Caleres
Performance |
| Timeline |
| Childrens Place |
| Continental |
Childrens Place and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Childrens Place and Continental
The main advantage of trading using opposite Childrens Place and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Childrens Place position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
| Continental vs. Vera Bradley | Continental vs. Wolverine World Wide | Continental vs. Rocky Brands | Continental vs. Steven Madden |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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