Correlation Between Green River and Childrens Place

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

By analyzing existing cross correlation between Green River Gold and Childrens Place, you can compare the effects of market volatilities on Green River 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 Green River with a short position of Childrens Place. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green River and Childrens Place.

Diversification Opportunities for Green River and Childrens Place

-0.22

Correlation Coefficient

Green River  Childrens Place

Very good diversification

The 3 months correlation between Green and Childrens is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Green River Gold and Childrens Place in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Childrens Place and Green River 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 Green River Gold 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 Green River i.e., Green River and Childrens Place go up and down completely randomly.

Pair Corralation between Green River and Childrens Place

Assuming the 90 days horizon Green River Gold is expected to generate 1.77 times more return on investment than Childrens Place. However, Green River is 1.77 times more volatile than Childrens Place. It trades about 0.01 of its potential returns per unit of risk. Childrens Place is currently generating about 0.01 per unit of risk. If you would invest  1.50  in Green River Gold on October 22, 2024 and sell it today you would lose (0.50) from holding Green River Gold or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Green River Gold  vs.  Childrens Place

Green River Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Childrens Place

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Childrens Place has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Childrens Place is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Green River and Childrens Place

The main advantage of trading using opposite Green River and Childrens Place positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green River 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.

The idea behind Green River Gold and Childrens Place 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.