Correlation Between Lands End and Kirklands

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

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

Diversification Opportunities for Lands End and Kirklands

0.61

Correlation Coefficient

Lands End  Kirklands

Poor diversification

The 3 months correlation between Lands and Kirklands is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and Kirklands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirklands and Lands End 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 Lands End are associated (or correlated) with Kirklands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirklands has no effect on the direction of Lands End i.e., Lands End and Kirklands go up and down completely randomly.

Pair Corralation between Lands End and Kirklands

Allowing for the 90-day total investment horizon Lands End is expected to generate 7.29 times less return on investment than Kirklands. But when comparing it to its historical volatility, Lands End is 1.28 times less risky than Kirklands. It trades about 0.02 of its potential returns per unit of risk. Kirklands is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  146.00  in Kirklands on August 30, 2024 and sell it today you would earn a total of  29.00  from holding Kirklands or generate 19.86% return on investment over 90 days.

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

Lands End  vs.  Kirklands

Lands End

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Lands End is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kirklands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kirklands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Kirklands disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lands End and Kirklands

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

The idea behind Lands End and Kirklands 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.