Correlation Between Shoe Carnival and Tillys

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

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

Diversification Opportunities for Shoe Carnival and Tillys

0.48

Correlation Coefficient

Shoe Carnival  Tillys

Very weak diversification

The 3 months correlation between Shoe and Tillys is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys Inc 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 Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and Tillys go up and down completely randomly.

Pair Corralation between Shoe Carnival and Tillys

Given the investment horizon of 90 days Shoe Carnival is expected to generate 0.56 times more return on investment than Tillys. However, Shoe Carnival is 1.78 times less risky than Tillys. It trades about -0.3 of its potential returns per unit of risk. Tillys Inc is currently generating about -0.2 per unit of risk. If you would invest  3,417  in Shoe Carnival on December 28, 2024 and sell it today you would lose (1,202) from holding Shoe Carnival or give up 35.18% 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.  Tillys Inc

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.

Tillys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tillys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic 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 Shoe Carnival and Tillys

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

The idea behind Shoe Carnival and Tillys 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.