Correlation Between Carters and Live Ventures

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

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

Diversification Opportunities for Carters and Live Ventures

0.91

Correlation Coefficient

Carters  Live Ventures

Almost no diversification

The 3 months correlation between Carters and Live is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures 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 Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of Carters i.e., Carters and Live Ventures go up and down completely randomly.

Pair Corralation between Carters and Live Ventures

Considering the 90-day investment horizon Carters is expected to generate 1.0 times more return on investment than Live Ventures. However, Carters is 1.0 times more volatile than Live Ventures. It trades about -0.1 of its potential returns per unit of risk. Live Ventures is currently generating about -0.16 per unit of risk. If you would invest  5,176  in Carters on December 28, 2024 and sell it today you would lose (1,004) from holding Carters or give up 19.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Carters  vs.  Live Ventures

Carters

Risk-Adjusted Performance

Very Weak

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

Live Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Carters and Live Ventures

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

The idea behind Carters and Live Ventures 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..