Correlation Between Childrens Place and Reitmans (Canada)
Can any of the company-specific risk be diversified away by investing in both Childrens Place and Reitmans (Canada) 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 Reitmans (Canada) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Childrens Place and Reitmans Limited, you can compare the effects of market volatilities on Childrens Place and Reitmans (Canada) 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 Reitmans (Canada). Check out your portfolio center. Please also check ongoing floating volatility patterns of Childrens Place and Reitmans (Canada).
Diversification Opportunities for Childrens Place and Reitmans (Canada)
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Childrens and Reitmans is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans (Canada) 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 Reitmans (Canada). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans (Canada) has no effect on the direction of Childrens Place i.e., Childrens Place and Reitmans (Canada) go up and down completely randomly.
Pair Corralation between Childrens Place and Reitmans (Canada)
Given the investment horizon of 90 days Childrens Place is expected to generate 10.99 times more return on investment than Reitmans (Canada). However, Childrens Place is 10.99 times more volatile than Reitmans Limited. It trades about 0.14 of its potential returns per unit of risk. Reitmans Limited is currently generating about -0.11 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Childrens Place vs. Reitmans Limited
Performance |
| Timeline |
| Childrens Place |
| Reitmans (Canada) |
Childrens Place and Reitmans (Canada) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Childrens Place and Reitmans (Canada)
The main advantage of trading using opposite Childrens Place and Reitmans (Canada) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Childrens Place position performs unexpectedly, Reitmans (Canada) 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 Reitmans (Canada) will offset losses from the drop in Reitmans (Canada)'s long position.| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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