Correlation Between Childrens Place and Card Factory
Can any of the company-specific risk be diversified away by investing in both Childrens Place and Card Factory 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 Card Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Childrens Place and Card Factory plc, you can compare the effects of market volatilities on Childrens Place and Card Factory 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 Card Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Childrens Place and Card Factory.
Diversification Opportunities for Childrens Place and Card Factory
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Childrens and Card is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and Card Factory plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Card Factory plc 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 Card Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Card Factory plc has no effect on the direction of Childrens Place i.e., Childrens Place and Card Factory go up and down completely randomly.
Pair Corralation between Childrens Place and Card Factory
Given the investment horizon of 90 days Childrens Place is expected to generate 13.76 times less return on investment than Card Factory. But when comparing it to its historical volatility, Childrens Place is 5.3 times less risky than Card Factory. It trades about 0.02 of its potential returns per unit of risk. Card Factory plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.01 in Card Factory plc on August 24, 2024 and sell it today you would earn a total of 115.99 from holding Card Factory plc or generate 5770.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Childrens Place vs. Card Factory plc
Performance |
| Timeline |
| Childrens Place |
| Card Factory plc |
Childrens Place and Card Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Childrens Place and Card Factory
The main advantage of trading using opposite Childrens Place and Card Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Childrens Place position performs unexpectedly, Card Factory 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 Card Factory will offset losses from the drop in Card Factory's long position.| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
| Card Factory vs. Burlington Stores | Card Factory vs. Childrens Place | Card Factory vs. Buckle Inc | Card Factory vs. Shoe Carnival |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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