Correlation Between Stoneridge and Childrens Place
Can any of the company-specific risk be diversified away by investing in both Stoneridge 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 Stoneridge and Childrens Place into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoneridge and Childrens Place, you can compare the effects of market volatilities on Stoneridge 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 Stoneridge with a short position of Childrens Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoneridge and Childrens Place.
Diversification Opportunities for Stoneridge and Childrens Place
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stoneridge and Childrens is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Stoneridge and Childrens Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Childrens Place and Stoneridge 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 Stoneridge 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 Stoneridge i.e., Stoneridge and Childrens Place go up and down completely randomly.
Pair Corralation between Stoneridge and Childrens Place
Considering the 90-day investment horizon Stoneridge is expected to under-perform the Childrens Place. In addition to that, Stoneridge is 1.36 times more volatile than Childrens Place. It trades about -0.18 of its total potential returns per unit of risk. Childrens Place is currently generating about 0.14 per unit of volatility. If you would invest 1,437 in Childrens Place on August 31, 2024 and sell it today you would earn a total of 178.00 from holding Childrens Place or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stoneridge vs. Childrens Place
Performance |
| Timeline |
| Stoneridge |
| Childrens Place |
Stoneridge and Childrens Place Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stoneridge and Childrens Place
The main advantage of trading using opposite Stoneridge and Childrens Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoneridge 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.| Stoneridge vs. Monro Muffler Brake | Stoneridge vs. Motorcar Parts of | Stoneridge vs. Standard Motor Products | Stoneridge vs. Douglas Dynamics |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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