Correlation Between Shoe Carnival and Halfords Group
Can any of the company-specific risk be diversified away by investing in both Shoe Carnival and Halfords Group 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 Halfords Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoe Carnival and Halfords Group PLC, you can compare the effects of market volatilities on Shoe Carnival and Halfords Group 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 Halfords Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and Halfords Group.
Diversification Opportunities for Shoe Carnival and Halfords Group
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shoe and Halfords is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and Halfords Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halfords Group PLC 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 Halfords Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halfords Group PLC has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and Halfords Group go up and down completely randomly.
Pair Corralation between Shoe Carnival and Halfords Group
Given the investment horizon of 90 days Shoe Carnival is expected to under-perform the Halfords Group. In addition to that, Shoe Carnival is 1.82 times more volatile than Halfords Group PLC. It trades about -0.09 of its total potential returns per unit of risk. Halfords Group PLC is currently generating about -0.03 per unit of volatility. If you would invest 366.00 in Halfords Group PLC on August 30, 2024 and sell it today you would lose (4.00) from holding Halfords Group PLC or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shoe Carnival vs. Halfords Group PLC
Performance |
| Timeline |
| Shoe Carnival |
| Halfords Group PLC |
Shoe Carnival and Halfords Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoe Carnival and Halfords Group
The main advantage of trading using opposite Shoe Carnival and Halfords Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoe Carnival position performs unexpectedly, Halfords Group 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 Halfords Group will offset losses from the drop in Halfords Group's long position.| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival vs. Cato Corporation |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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