Correlation Between Boot Barn and Jeffs Brands

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

By analyzing existing cross correlation between Boot Barn Holdings and Jeffs Brands, you can compare the effects of market volatilities on Boot Barn and Jeffs Brands 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 Boot Barn with a short position of Jeffs Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boot Barn and Jeffs Brands.

Diversification Opportunities for Boot Barn and Jeffs Brands

-0.35

Correlation Coefficient

Boot Barn  Jeffs Brands

Very good diversification

The 3 months correlation between Boot and Jeffs is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Jeffs Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeffs Brands and Boot Barn 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 Boot Barn Holdings are associated (or correlated) with Jeffs Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeffs Brands has no effect on the direction of Boot Barn i.e., Boot Barn and Jeffs Brands go up and down completely randomly.

Pair Corralation between Boot Barn and Jeffs Brands

Given the investment horizon of 90 days Boot Barn is expected to generate 93.11 times less return on investment than Jeffs Brands. But when comparing it to its historical volatility, Boot Barn Holdings is 86.85 times less risky than Jeffs Brands. It trades about 0.2 of its potential returns per unit of risk. Jeffs Brands is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Jeffs Brands on September 1, 2024 and sell it today you would earn a total of  234.00  from holding Jeffs Brands or generate 709.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Boot Barn Holdings  vs.  Jeffs Brands

Boot Barn Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boot Barn Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Boot Barn is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jeffs Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeffs Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Jeffs Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boot Barn and Jeffs Brands

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

The idea behind Boot Barn Holdings and Jeffs Brands 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.