Correlation Between Williams Sonoma and Cato
Can any of the company-specific risk be diversified away by investing in both Williams Sonoma and Cato 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 Williams Sonoma and Cato into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Williams Sonoma and Cato Corporation, you can compare the effects of market volatilities on Williams Sonoma and Cato 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 Williams Sonoma with a short position of Cato. Check out your portfolio center. Please also check ongoing floating volatility patterns of Williams Sonoma and Cato.
Diversification Opportunities for Williams Sonoma and Cato
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Williams and Cato is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Williams Sonoma and Cato Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cato and Williams Sonoma 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 Williams Sonoma are associated (or correlated) with Cato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cato has no effect on the direction of Williams Sonoma i.e., Williams Sonoma and Cato go up and down completely randomly.
Pair Corralation between Williams Sonoma and Cato
Considering the 90-day investment horizon Williams Sonoma is expected to generate 0.85 times more return on investment than Cato. However, Williams Sonoma is 1.18 times less risky than Cato. It trades about 0.22 of its potential returns per unit of risk. Cato Corporation is currently generating about -0.37 per unit of risk. If you would invest 13,243 in Williams Sonoma on August 31, 2024 and sell it today you would earn a total of 3,896 from holding Williams Sonoma or generate 29.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Williams Sonoma vs. Cato Corp.
Performance |
| Timeline |
| Williams Sonoma |
| Cato |
Williams Sonoma and Cato Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Williams Sonoma and Cato
The main advantage of trading using opposite Williams Sonoma and Cato positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Williams Sonoma position performs unexpectedly, Cato 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 Cato will offset losses from the drop in Cato's long position.| Williams Sonoma vs. AutoZone | Williams Sonoma vs. Ulta Beauty | Williams Sonoma vs. Best Buy Co | Williams Sonoma vs. RH |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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