Correlation Between Carters and Genesco

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

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

Diversification Opportunities for Carters and Genesco

-0.34

Correlation Coefficient

Carters  Genesco

Very good diversification

The 3 months correlation between Carters and Genesco is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Genesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesco and Carters 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 Carters are associated (or correlated) with Genesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesco has no effect on the direction of Carters i.e., Carters and Genesco go up and down completely randomly.

Pair Corralation between Carters and Genesco

Considering the 90-day investment horizon Carters is expected to generate 20.0 times less return on investment than Genesco. But when comparing it to its historical volatility, Carters is 2.3 times less risky than Genesco. It trades about 0.03 of its potential returns per unit of risk. Genesco is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,491  in Genesco on September 24, 2024 and sell it today you would earn a total of  637.00  from holding Genesco or generate 18.25% return on investment over 90 days.

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

Carters  vs.  Genesco

Carters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Genesco

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Genesco are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Genesco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carters and Genesco

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

The idea behind Carters and Genesco 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.