Correlation Between Canada Goose and Carters

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

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

Diversification Opportunities for Canada Goose and Carters

0.74

Correlation Coefficient

Canada Goose  Carters

Poor diversification

The 3 months correlation between Canada and Carters is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and Canada Goose 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 Canada Goose Holdings are associated (or correlated) with Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Canada Goose i.e., Canada Goose and Carters go up and down completely randomly.

Pair Corralation between Canada Goose and Carters

Given the investment horizon of 90 days Canada Goose Holdings is expected to under-perform the Carters. In addition to that, Canada Goose is 1.61 times more volatile than Carters. It trades about -0.02 of its total potential returns per unit of risk. Carters is currently generating about -0.01 per unit of volatility. If you would invest  6,819  in Carters on September 23, 2024 and sell it today you would lose (1,255) from holding Carters or give up 18.4% of portfolio value over 90 days.

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

Canada Goose Holdings  vs.  Carters

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Canada Goose and Carters

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

The idea behind Canada Goose Holdings and Carters 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.