Correlation Between Stitch Fix and Childrens Place
Can any of the company-specific risk be diversified away by investing in both Stitch Fix and Childrens Place 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 Stitch Fix and Childrens Place into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stitch Fix and Childrens Place, you can compare the effects of market volatilities on Stitch Fix and Childrens Place 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 Stitch Fix with a short position of Childrens Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stitch Fix and Childrens Place.
Diversification Opportunities for Stitch Fix and Childrens Place
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stitch and Childrens is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Stitch Fix and Childrens Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Childrens Place and Stitch Fix 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 Stitch Fix are associated (or correlated) with Childrens Place. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Childrens Place has no effect on the direction of Stitch Fix i.e., Stitch Fix and Childrens Place go up and down completely randomly.
Pair Corralation between Stitch Fix and Childrens Place
Given the investment horizon of 90 days Stitch Fix is expected to generate 4.29 times less return on investment than Childrens Place. But when comparing it to its historical volatility, Stitch Fix is 2.22 times less risky than Childrens Place. It trades about 0.09 of its potential returns per unit of risk. Childrens Place is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 578.00 in Childrens Place on August 28, 2024 and sell it today you would earn a total of 1,025 from holding Childrens Place or generate 177.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stitch Fix vs. Childrens Place
Performance |
| Timeline |
| Stitch Fix |
| Childrens Place |
Stitch Fix and Childrens Place Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stitch Fix and Childrens Place
The main advantage of trading using opposite Stitch Fix and Childrens Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stitch Fix position performs unexpectedly, Childrens Place 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 Childrens Place will offset losses from the drop in Childrens Place's long position.The idea behind Stitch Fix and Childrens Place pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Childrens Place vs. Ross Stores | Childrens Place vs. Buckle Inc | Childrens Place vs. Guess Inc | Childrens Place vs. Abercrombie Fitch |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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