Correlation Between Shoe Carnival and Alimentation Couchen

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

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

Diversification Opportunities for Shoe Carnival and Alimentation Couchen

-0.31

Correlation Coefficient

Shoe Carnival  Alimentation Couchen

Very good diversification

The 3 months correlation between Shoe and Alimentation is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and Alimentation Couchen Tard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimentation Couchen Tard and Shoe Carnival 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 Shoe Carnival are associated (or correlated) with Alimentation Couchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimentation Couchen Tard has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and Alimentation Couchen go up and down completely randomly.

Pair Corralation between Shoe Carnival and Alimentation Couchen

Given the investment horizon of 90 days Shoe Carnival is expected to under-perform the Alimentation Couchen. In addition to that, Shoe Carnival is 2.12 times more volatile than Alimentation Couchen Tard. It trades about -0.08 of its total potential returns per unit of risk. Alimentation Couchen Tard is currently generating about 0.04 per unit of volatility. If you would invest  5,314  in Alimentation Couchen Tard on October 6, 2024 and sell it today you would earn a total of  99.00  from holding Alimentation Couchen Tard or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Shoe Carnival  vs.  Alimentation Couchen Tard

Shoe Carnival

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shoe Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Alimentation Couchen Tard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alimentation Couchen Tard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alimentation Couchen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shoe Carnival and Alimentation Couchen

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

The idea behind Shoe Carnival and Alimentation Couchen Tard 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.