Correlation Between Target and Container Store
Can any of the company-specific risk be diversified away by investing in both Target and Container Store 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 Target and Container Store into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and Container Store Group, you can compare the effects of market volatilities on Target and Container Store 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 Target with a short position of Container Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Container Store.
Diversification Opportunities for Target and Container Store
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Target and Container is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Target and Container Store Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Container Store Group and Target 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 Target are associated (or correlated) with Container Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Container Store Group has no effect on the direction of Target i.e., Target and Container Store go up and down completely randomly.
Pair Corralation between Target and Container Store
Considering the 90-day investment horizon Target is expected to generate 0.8 times more return on investment than Container Store. However, Target is 1.24 times less risky than Container Store. It trades about -0.09 of its potential returns per unit of risk. Container Store Group is currently generating about -0.15 per unit of risk. If you would invest 14,976 in Target on September 2, 2024 and sell it today you would lose (1,745) from holding Target or give up 11.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. Container Store Group
Performance |
| Timeline |
| Target |
| Container Store Group |
Target and Container Store Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Container Store
The main advantage of trading using opposite Target and Container Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, Container Store 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 Container Store will offset losses from the drop in Container Store's long position.| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
| Container Store vs. Tillys Inc | Container Store vs. Big 5 Sporting | Container Store vs. Sportsmans | Container Store vs. Noodles Company |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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