Correlation Between Childrens Place and Guess

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

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

Diversification Opportunities for Childrens Place and Guess

0.83

Correlation Coefficient

Childrens Place  Guess

Very poor diversification

The 3 months correlation between Childrens and Guess is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Childrens Place and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess 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 Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Childrens Place i.e., Childrens Place and Guess go up and down completely randomly.

Pair Corralation between Childrens Place and Guess

Given the investment horizon of 90 days Childrens Place is expected to generate 0.99 times more return on investment than Guess. However, Childrens Place is 1.01 times less risky than Guess. It trades about -0.03 of its potential returns per unit of risk. Guess Inc is currently generating about -0.05 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	Strong
Accuracy	100.0%
Values	Daily Returns

Childrens Place  vs.  Guess 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.

Guess Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guess Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Childrens Place and Guess

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

The idea behind Childrens Place and Guess 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.