Correlation Between Carters and Tillys

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

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

Diversification Opportunities for Carters and Tillys

0.33

Correlation Coefficient

Carters  Tillys

Weak diversification

The 3 months correlation between Carters and Tillys is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys Inc 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 Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Carters i.e., Carters and Tillys go up and down completely randomly.

Pair Corralation between Carters and Tillys

Considering the 90-day investment horizon Carters is expected to under-perform the Tillys. But the stock apears to be less risky and, when comparing its historical volatility, Carters is 1.59 times less risky than Tillys. The stock trades about -0.12 of its potential returns per unit of risk. The Tillys Inc is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  443.00  in Tillys Inc on October 12, 2024 and sell it today you would lose (18.00) from holding Tillys Inc or give up 4.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Carters  vs.  Tillys Inc

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Tillys Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tillys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tillys is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Carters and Tillys

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

The idea behind Carters and Tillys Inc 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.