Correlation Between Carters and XBP Europe

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

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

Diversification Opportunities for Carters and XBP Europe

-0.01

Correlation Coefficient

Carters  XBP Europe

Good diversification

The 3 months correlation between Carters and XBP is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Carters and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings 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 XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of Carters i.e., Carters and XBP Europe go up and down completely randomly.

Pair Corralation between Carters and XBP Europe

Considering the 90-day investment horizon Carters is expected to generate 0.35 times more return on investment than XBP Europe. However, Carters is 2.83 times less risky than XBP Europe. It trades about -0.07 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about -0.06 per unit of risk. If you would invest  5,586  in Carters on October 6, 2024 and sell it today you would lose (149.00) from holding Carters or give up 2.67% of portfolio value over 90 days.

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

Carters  vs.  XBP Europe Holdings

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 latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

XBP Europe Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XBP Europe Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental drivers, XBP Europe may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Carters and XBP Europe

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

The idea behind Carters and XBP Europe Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.