Correlation Between Shoe Carnival and MarineMax

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

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

Diversification Opportunities for Shoe Carnival and MarineMax

0.57

Correlation Coefficient

Shoe Carnival  MarineMax

Very weak diversification

The 3 months correlation between Shoe and MarineMax is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax 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 MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and MarineMax go up and down completely randomly.

Pair Corralation between Shoe Carnival and MarineMax

Given the investment horizon of 90 days Shoe Carnival is expected to under-perform the MarineMax. But the stock apears to be less risky and, when comparing its historical volatility, Shoe Carnival is 1.4 times less risky than MarineMax. The stock trades about -0.29 of its potential returns per unit of risk. The MarineMax is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,729  in MarineMax on December 29, 2024 and sell it today you would lose (399.00) from holding MarineMax or give up 14.62% of portfolio value over 90 days.

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

Shoe Carnival  vs.  MarineMax

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.

MarineMax

Risk-Adjusted Performance

Very Weak

Over the last 90 days MarineMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Shoe Carnival and MarineMax

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

The idea behind Shoe Carnival and MarineMax 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.