Correlation Between Boot Barn and Reitmans

Can any of the company-specific risk be diversified away by investing in both Boot Barn and Reitmans 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 Reitmans 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 Reitmans Limited, you can compare the effects of market volatilities on Boot Barn and Reitmans 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 Reitmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boot Barn and Reitmans.

Diversification Opportunities for Boot Barn and Reitmans

0.32

Correlation Coefficient

Boot Barn  Reitmans

Weak diversification

The 3 months correlation between Boot and Reitmans is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Limited 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 Reitmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Limited has no effect on the direction of Boot Barn i.e., Boot Barn and Reitmans go up and down completely randomly.

Pair Corralation between Boot Barn and Reitmans

Given the investment horizon of 90 days Boot Barn Holdings is expected to generate 1.06 times more return on investment than Reitmans. However, Boot Barn is 1.06 times more volatile than Reitmans Limited. It trades about 0.07 of its potential returns per unit of risk. Reitmans Limited is currently generating about 0.01 per unit of risk. If you would invest  6,300  in Boot Barn Holdings on September 26, 2024 and sell it today you would earn a total of  8,498  from holding Boot Barn Holdings or generate 134.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Boot Barn Holdings  vs.  Reitmans Limited

Boot Barn Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boot Barn Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Reitmans Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reitmans Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Reitmans is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boot Barn and Reitmans

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

The idea behind Boot Barn Holdings and Reitmans Limited 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..