Correlation Between Tillys and Carters

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

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

Diversification Opportunities for Tillys and Carters

0.62

Correlation Coefficient

Tillys  Carters

Poor diversification

The 3 months correlation between Tillys and Carters is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tillys Inc and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and Tillys 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 Tillys Inc are associated (or correlated) with Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Tillys i.e., Tillys and Carters go up and down completely randomly.

Pair Corralation between Tillys and Carters

Given the investment horizon of 90 days Tillys Inc is expected to under-perform the Carters. In addition to that, Tillys is 2.47 times more volatile than Carters. It trades about -0.23 of its total potential returns per unit of risk. Carters is currently generating about 0.03 per unit of volatility. If you would invest  5,528  in Carters on September 24, 2024 and sell it today you would earn a total of  36.00  from holding Carters or generate 0.65% return on investment over 90 days.

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

Tillys Inc  vs.  Carters

Tillys Inc

Risk-Adjusted Performance

0 of 100

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Carters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Tillys and Carters

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

The idea behind Tillys Inc and Carters 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 CEOs Directory module to screen CEOs from public companies around the world.