Correlation Between Childrens Place and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Childrens Place and T.J. Maxx 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 T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Childrens Place and The TJX Companies, you can compare the effects of market volatilities on Childrens Place and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Childrens Place and T.J. Maxx.
Diversification Opportunities for Childrens Place and T.J. Maxx
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Childrens and T.J. is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Childrens Place i.e., Childrens Place and T.J. Maxx go up and down completely randomly.
Pair Corralation between Childrens Place and T.J. Maxx
Given the investment horizon of 90 days Childrens Place is expected to generate 5.6 times more return on investment than T.J. Maxx. However, Childrens Place is 5.6 times more volatile than The TJX Companies. It trades about 0.21 of its potential returns per unit of risk. The TJX Companies is currently generating about 0.53 per unit of risk. If you would invest 1,315 in Childrens Place on August 30, 2024 and sell it today you would earn a total of 300.00 from holding Childrens Place or generate 22.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Childrens Place vs. The TJX Companies
Performance |
| Timeline |
| Childrens Place |
| TJX Companies |
Childrens Place and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Childrens Place and T.J. Maxx
The main advantage of trading using opposite Childrens Place and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Childrens Place position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
| T.J. Maxx vs. Burlington Stores | T.J. Maxx vs. Guess Inc | T.J. Maxx vs. Urban Outfitters | T.J. Maxx vs. Childrens Place |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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