Correlation Between Jeffs Brands and Cato

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

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

Diversification Opportunities for Jeffs Brands and Cato

-0.76

Correlation Coefficient

Jeffs Brands  Cato

Pay attention - limited upside

The 3 months correlation between Jeffs and Cato is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Jeffs Brands and Cato Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cato and Jeffs Brands 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 Jeffs Brands are associated (or correlated) with Cato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cato has no effect on the direction of Jeffs Brands i.e., Jeffs Brands and Cato go up and down completely randomly.

Pair Corralation between Jeffs Brands and Cato

Given the investment horizon of 90 days Jeffs Brands is expected to generate 15.6 times more return on investment than Cato. However, Jeffs Brands is 15.6 times more volatile than Cato Corporation. It trades about 0.04 of its potential returns per unit of risk. Cato Corporation is currently generating about -0.03 per unit of risk. If you would invest  1,106  in Jeffs Brands on October 5, 2024 and sell it today you would lose (840.00) from holding Jeffs Brands or give up 75.95% of portfolio value over 90 days.

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

Jeffs Brands  vs.  Cato Corp.

Jeffs Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeffs Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Jeffs Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Cato

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cato Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Jeffs Brands and Cato

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

The idea behind Jeffs Brands and Cato Corporation 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.