Correlation Between Shoe Carnival and Kontoor Brands
Can any of the company-specific risk be diversified away by investing in both Shoe Carnival and Kontoor Brands 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 Kontoor Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoe Carnival and Kontoor Brands, you can compare the effects of market volatilities on Shoe Carnival and Kontoor Brands 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 Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and Kontoor Brands.
Diversification Opportunities for Shoe Carnival and Kontoor Brands
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shoe and Kontoor is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands 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 Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and Kontoor Brands go up and down completely randomly.
Pair Corralation between Shoe Carnival and Kontoor Brands
Given the investment horizon of 90 days Shoe Carnival is expected to generate 1.8 times less return on investment than Kontoor Brands. In addition to that, Shoe Carnival is 1.11 times more volatile than Kontoor Brands. It trades about 0.04 of its total potential returns per unit of risk. Kontoor Brands is currently generating about 0.08 per unit of volatility. If you would invest 4,000 in Kontoor Brands on September 3, 2024 and sell it today you would earn a total of 5,178 from holding Kontoor Brands or generate 129.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoe Carnival vs. Kontoor Brands
Performance |
| Timeline |
| Shoe Carnival |
| Kontoor Brands |
Shoe Carnival and Kontoor Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoe Carnival and Kontoor Brands
The main advantage of trading using opposite Shoe Carnival and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoe Carnival position performs unexpectedly, Kontoor Brands 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 Kontoor Brands will offset losses from the drop in Kontoor Brands' long position.| Shoe Carnival vs. Citi Trends | Shoe Carnival vs. Zumiez Inc | Shoe Carnival vs. Buckle Inc | Shoe Carnival vs. Cato Corporation |
| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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