Correlation Between T.J. Maxx and Shoe Carnival
Can any of the company-specific risk be diversified away by investing in both T.J. Maxx and Shoe Carnival 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 T.J. Maxx and Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The TJX Companies and Shoe Carnival, you can compare the effects of market volatilities on T.J. Maxx and Shoe Carnival 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 T.J. Maxx with a short position of Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of T.J. Maxx and Shoe Carnival.
Diversification Opportunities for T.J. Maxx and Shoe Carnival
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between T.J. and Shoe is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding The TJX Companies and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival and T.J. Maxx 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 The TJX Companies are associated (or correlated) with Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of T.J. Maxx i.e., T.J. Maxx and Shoe Carnival go up and down completely randomly.
Pair Corralation between T.J. Maxx and Shoe Carnival
Considering the 90-day investment horizon The TJX Companies is expected to generate 0.39 times more return on investment than Shoe Carnival. However, The TJX Companies is 2.55 times less risky than Shoe Carnival. It trades about 0.48 of its potential returns per unit of risk. Shoe Carnival is currently generating about -0.04 per unit of risk. If you would invest 11,382 in The TJX Companies on August 28, 2024 and sell it today you would earn a total of 1,097 from holding The TJX Companies or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The TJX Companies vs. Shoe Carnival
Performance |
| Timeline |
| TJX Companies |
| Shoe Carnival |
T.J. Maxx and Shoe Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T.J. Maxx and Shoe Carnival
The main advantage of trading using opposite T.J. Maxx and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T.J. Maxx position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.| T.J. Maxx vs. Burlington Stores | T.J. Maxx vs. Guess Inc | T.J. Maxx vs. Urban Outfitters | T.J. Maxx vs. Childrens Place |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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