Correlation Between Buckle and Card Factory

Can any of the company-specific risk be diversified away by investing in both Buckle and Card Factory 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 Buckle and Card Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Buckle Inc and Card Factory plc, you can compare the effects of market volatilities on Buckle and Card Factory 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 Buckle with a short position of Card Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buckle and Card Factory.

Diversification Opportunities for Buckle and Card Factory

0.59

Correlation Coefficient

Buckle  Card Factory

Very weak diversification

The 3 months correlation between Buckle and Card is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Buckle Inc and Card Factory plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Card Factory plc and Buckle 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 Buckle Inc are associated (or correlated) with Card Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Card Factory plc has no effect on the direction of Buckle i.e., Buckle and Card Factory go up and down completely randomly.

Pair Corralation between Buckle and Card Factory

Considering the 90-day investment horizon Buckle Inc is expected to generate 0.56 times more return on investment than Card Factory. However, Buckle Inc is 1.78 times less risky than Card Factory. It trades about -0.22 of its potential returns per unit of risk. Card Factory plc is currently generating about -0.15 per unit of risk. If you would invest  4,888  in Buckle Inc on December 25, 2024 and sell it today you would lose (983.00) from holding Buckle Inc or give up 20.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Buckle Inc  vs.  Card Factory plc

Buckle Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Buckle Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Card Factory plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Card Factory plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Buckle and Card Factory

The main advantage of trading using opposite Buckle and Card Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buckle position performs unexpectedly, Card Factory 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 Card Factory will offset losses from the drop in Card Factory's long position.

The idea behind Buckle Inc and Card Factory plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.