Correlation Between Tile Shop and Childrens Place
Can any of the company-specific risk be diversified away by investing in both Tile Shop 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 Tile Shop and Childrens Place 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 Childrens Place, you can compare the effects of market volatilities on Tile Shop 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 Tile Shop with a short position of Childrens Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tile Shop and Childrens Place.
Diversification Opportunities for Tile Shop and Childrens Place
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tile and Childrens is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tile Shop Holdings and Childrens Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Childrens Place 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 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 Tile Shop i.e., Tile Shop and Childrens Place go up and down completely randomly.
Pair Corralation between Tile Shop and Childrens Place
Given the investment horizon of 90 days Tile Shop Holdings is expected to under-perform the Childrens Place. But the stock apears to be less risky and, when comparing its historical volatility, Tile Shop Holdings is 2.37 times less risky than Childrens Place. The stock trades about -0.03 of its potential returns per unit of risk. The Childrens Place is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tile Shop Holdings vs. Childrens Place
Performance |
| Timeline |
| Tile Shop Holdings |
| Childrens Place |
Tile Shop and Childrens Place Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tile Shop and Childrens Place
The main advantage of trading using opposite Tile Shop and Childrens Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tile Shop 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.| Tile Shop vs. RLJ Lodging Trust | Tile Shop vs. Aquagold International | Tile Shop vs. Stepstone Group | Tile Shop vs. Morningstar Unconstrained Allocation |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |