Correlation Between Childrens Place and Buckle

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

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

Diversification Opportunities for Childrens Place and Buckle

0.9

Correlation Coefficient

Childrens Place  Buckle

Almost no diversification

The 3 months correlation between Childrens and Buckle is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and Buckle Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc and Childrens Place 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 Childrens Place are associated (or correlated) with Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of Childrens Place i.e., Childrens Place and Buckle go up and down completely randomly.

Pair Corralation between Childrens Place and Buckle

Given the investment horizon of 90 days Childrens Place is expected to generate 3.03 times more return on investment than Buckle. However, Childrens Place is 3.03 times more volatile than Buckle Inc. It trades about -0.03 of its potential returns per unit of risk. Buckle Inc is currently generating about -0.2 per unit of risk. If you would invest  1,048  in Childrens Place on December 29, 2024 and sell it today you would lose (155.00) from holding Childrens Place or give up 14.79% of portfolio value over 90 days.

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

Childrens Place  vs.  Buckle Inc

Childrens Place

Risk-Adjusted Performance

Very Weak

Over the last 90 days Childrens Place has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Buckle Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Buckle Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Childrens Place and Buckle

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

The idea behind Childrens Place and Buckle Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.