Correlation Between Childrens Place and Stitch Fix
Can any of the company-specific risk be diversified away by investing in both Childrens Place and Stitch Fix 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 Stitch Fix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Childrens Place and Stitch Fix, you can compare the effects of market volatilities on Childrens Place and Stitch Fix 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 Stitch Fix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Childrens Place and Stitch Fix.
Diversification Opportunities for Childrens Place and Stitch Fix
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Childrens and Stitch is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and Stitch Fix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stitch Fix 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 Stitch Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stitch Fix has no effect on the direction of Childrens Place i.e., Childrens Place and Stitch Fix go up and down completely randomly.
Pair Corralation between Childrens Place and Stitch Fix
Given the investment horizon of 90 days Childrens Place is expected to generate 1.54 times less return on investment than Stitch Fix. In addition to that, Childrens Place is 1.45 times more volatile than Stitch Fix. It trades about 0.24 of its total potential returns per unit of risk. Stitch Fix is currently generating about 0.54 per unit of volatility. If you would invest 312.00 in Stitch Fix on August 27, 2024 and sell it today you would earn a total of 141.00 from holding Stitch Fix or generate 45.19% 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. Stitch Fix
Performance |
| Timeline |
| Childrens Place |
| Stitch Fix |
Childrens Place and Stitch Fix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Childrens Place and Stitch Fix
The main advantage of trading using opposite Childrens Place and Stitch Fix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Childrens Place position performs unexpectedly, Stitch Fix 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 Stitch Fix will offset losses from the drop in Stitch Fix's long position.| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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