Correlation Between Shoe Carnival and Guess
Can any of the company-specific risk be diversified away by investing in both Shoe Carnival and Guess 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 Shoe Carnival and Guess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoe Carnival and Guess Inc, you can compare the effects of market volatilities on Shoe Carnival and Guess 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 Shoe Carnival with a short position of Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and Guess.
Diversification Opportunities for Shoe Carnival and Guess
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shoe and Guess is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc and Shoe Carnival 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 Shoe Carnival are associated (or correlated) with Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and Guess go up and down completely randomly.
Pair Corralation between Shoe Carnival and Guess
Given the investment horizon of 90 days Shoe Carnival is expected to generate 1.0 times more return on investment than Guess. However, Shoe Carnival is 1.0 times less risky than Guess. It trades about 0.04 of its potential returns per unit of risk. Guess Inc is currently generating about 0.01 per unit of risk. If you would invest 2,374 in Shoe Carnival on August 27, 2024 and sell it today you would earn a total of 1,016 from holding Shoe Carnival or generate 42.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoe Carnival vs. Guess Inc
Performance |
| Timeline |
| Shoe Carnival |
| Guess Inc |
Shoe Carnival and Guess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoe Carnival and Guess
The main advantage of trading using opposite Shoe Carnival and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoe Carnival position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' long position.| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival vs. Cato Corporation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |