Correlation Between Tile Shop and Guess
Can any of the company-specific risk be diversified away by investing in both Tile Shop and Guess 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 Tile Shop and Guess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tile Shop Holdings and Guess Inc, you can compare the effects of market volatilities on Tile Shop and Guess 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 Tile Shop with a short position of Guess. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tile Shop and Guess.
Diversification Opportunities for Tile Shop and Guess
Very good diversification
The 3 months correlation between Tile and Guess is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tile Shop Holdings and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc and Tile Shop 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 Tile Shop Holdings are associated (or correlated) with Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Tile Shop i.e., Tile Shop and Guess go up and down completely randomly.
Pair Corralation between Tile Shop and Guess
Given the investment horizon of 90 days Tile Shop Holdings is expected to generate 0.85 times more return on investment than Guess. However, Tile Shop Holdings is 1.18 times less risky than Guess. It trades about 0.01 of its potential returns per unit of risk. Guess Inc is currently generating about -0.01 per unit of risk. If you would invest 675.00 in Tile Shop Holdings on August 26, 2024 and sell it today you would lose (14.00) from holding Tile Shop Holdings or give up 2.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tile Shop Holdings vs. Guess Inc
Performance |
| Timeline |
| Tile Shop Holdings |
| Guess Inc |
Tile Shop and Guess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tile Shop and Guess
The main advantage of trading using opposite Tile Shop and Guess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tile Shop position performs unexpectedly, Guess 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 Guess will offset losses from the drop in Guess' long position.| Tile Shop vs. Arhaus Inc | Tile Shop vs. Haverty Furniture Companies | Tile Shop vs. Kirklands | Tile Shop vs. Haverty Furniture Companies |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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