Correlation Between Card Factory and Winmark

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

Diversification Opportunities for Card Factory and Winmark

0.51

Correlation Coefficient

Card Factory  Winmark

Very weak diversification

The 3 months correlation between Card and Winmark is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc and Winmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winmark 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 Winmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winmark has no effect on the direction of Card Factory i.e., Card Factory and Winmark go up and down completely randomly.

Pair Corralation between Card Factory and Winmark

Assuming the 90 days horizon Card Factory plc is expected to under-perform the Winmark. In addition to that, Card Factory is 1.69 times more volatile than Winmark. It trades about -0.15 of its total potential returns per unit of risk. Winmark is currently generating about -0.2 per unit of volatility. If you would invest  39,162  in Winmark on December 29, 2024 and sell it today you would lose (7,662) from holding Winmark or give up 19.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Card Factory plc  vs.  Winmark

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.

Winmark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winmark 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 basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Card Factory and Winmark

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

The idea behind Card Factory plc and Winmark 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.