Correlation Between Shoe Carnival and Global E

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

By analyzing existing cross correlation between Shoe Carnival and Global E Online, you can compare the effects of market volatilities on Shoe Carnival and Global E 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 Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and Global E.

Diversification Opportunities for Shoe Carnival and Global E

0.63

Correlation Coefficient

Shoe Carnival  Global E

Poor diversification

The 3 months correlation between Shoe and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and Global E go up and down completely randomly.

Pair Corralation between Shoe Carnival and Global E

Given the investment horizon of 90 days Shoe Carnival is expected to under-perform the Global E. But the stock apears to be less risky and, when comparing its historical volatility, Shoe Carnival is 1.45 times less risky than Global E. The stock trades about -0.3 of its potential returns per unit of risk. The Global E Online is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  5,452  in Global E Online on December 28, 2024 and sell it today you would lose (1,780) from holding Global E Online or give up 32.65% of portfolio value over 90 days.

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

Shoe Carnival  vs.  Global E Online

Shoe Carnival

Risk-Adjusted Performance

Very Weak

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

Global E Online

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental drivers 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 Shoe Carnival and Global E

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

The idea behind Shoe Carnival and Global E Online 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.