Correlation Between Card Factory and School Specialty

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

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

Diversification Opportunities for Card Factory and School Specialty

0.0

Correlation Coefficient

Card Factory  School Specialty

Pay attention - limited upside

The 3 months correlation between Card and School is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and School Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on School Specialty and Card Factory 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 Card Factory plc are associated (or correlated) with School Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of School Specialty has no effect on the direction of Card Factory i.e., Card Factory and School Specialty go up and down completely randomly.

Pair Corralation between Card Factory and School Specialty

If you would invest  0.01  in School Specialty on December 28, 2024 and sell it today you would earn a total of  0.00  from holding School Specialty or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Card Factory plc  vs.  School Specialty

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 weak 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.

School Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days School Specialty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, School Specialty is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Card Factory and School Specialty

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

The idea behind Card Factory plc and School Specialty 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.