Correlation Between Childrens Place and Carters
Can any of the company-specific risk be diversified away by investing in both Childrens Place and Carters 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 Carters into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Childrens Place and Carters, you can compare the effects of market volatilities on Childrens Place and Carters 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 Carters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Childrens Place and Carters.
Diversification Opportunities for Childrens Place and Carters
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Childrens and Carters is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters 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 Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Childrens Place i.e., Childrens Place and Carters go up and down completely randomly.
Pair Corralation between Childrens Place and Carters
Given the investment horizon of 90 days Childrens Place is expected to generate 4.06 times more return on investment than Carters. However, Childrens Place is 4.06 times more volatile than Carters. It trades about 0.02 of its potential returns per unit of risk. Carters is currently generating about -0.09 per unit of risk. If you would invest 1,300 in Childrens Place on November 28, 2024 and sell it today you would lose (405.00) from holding Childrens Place or give up 31.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Childrens Place vs. Carters
Performance |
| Timeline |
| Childrens Place |
| Carters |
Childrens Place and Carters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Childrens Place and Carters
The main advantage of trading using opposite Childrens Place and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Childrens Place position performs unexpectedly, Carters 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 Carters will offset losses from the drop in Carters' long position.| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
| Carters vs. Childrens Place | Carters vs. Gildan Activewear | Carters vs. Oxford Industries | Carters vs. Columbia Sportswear |
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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