Correlation Between Hibbett Sports and Carters

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

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

Diversification Opportunities for Hibbett Sports and Carters

-0.37

Correlation Coefficient

Hibbett Sports  Carters

Very good diversification

The 3 months correlation between Hibbett and Carters is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hibbett Sports and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and Hibbett Sports 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 Hibbett Sports 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 Hibbett Sports i.e., Hibbett Sports and Carters go up and down completely randomly.

Pair Corralation between Hibbett Sports and Carters

If you would invest  5,528  in Carters on September 24, 2024 and sell it today you would earn a total of  36.00  from holding Carters or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Hibbett Sports  vs.  Carters

Hibbett Sports

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hibbett Sports has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Hibbett Sports is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 Hibbett Sports and Carters

The main advantage of trading using opposite Hibbett Sports and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hibbett Sports 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 Hibbett Sports 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.