Correlation Between Shoe Carnival and JJill
Can any of the company-specific risk be diversified away by investing in both Shoe Carnival and JJill 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 JJill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoe Carnival and JJill Inc, you can compare the effects of market volatilities on Shoe Carnival and JJill 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 JJill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and JJill.
Diversification Opportunities for Shoe Carnival and JJill
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shoe and JJill is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill 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 JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and JJill go up and down completely randomly.
Pair Corralation between Shoe Carnival and JJill
Given the investment horizon of 90 days Shoe Carnival is expected to generate 0.89 times more return on investment than JJill. However, Shoe Carnival is 1.12 times less risky than JJill. It trades about 0.04 of its potential returns per unit of risk. JJill Inc is currently generating about 0.02 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoe Carnival vs. JJill Inc
Performance |
| Timeline |
| Shoe Carnival |
| JJill Inc |
Shoe Carnival and JJill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoe Carnival and JJill
The main advantage of trading using opposite Shoe Carnival and JJill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoe Carnival position performs unexpectedly, JJill 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 JJill will offset losses from the drop in JJill's 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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