Correlation Between FREEPORT and Shoe Carnival

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

By analyzing existing cross correlation between FREEPORT MCMORAN INC 4375 and Shoe Carnival, you can compare the effects of market volatilities on FREEPORT and Shoe Carnival 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 FREEPORT with a short position of Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREEPORT and Shoe Carnival.

Diversification Opportunities for FREEPORT and Shoe Carnival

0.38

Correlation Coefficient

FREEPORT  Shoe Carnival

Weak diversification

The 3 months correlation between FREEPORT and Shoe is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding FREEPORT MCMORAN INC 4375 and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival and FREEPORT 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 FREEPORT MCMORAN INC 4375 are associated (or correlated) with Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of FREEPORT i.e., FREEPORT and Shoe Carnival go up and down completely randomly.

Pair Corralation between FREEPORT and Shoe Carnival

Assuming the 90 days trading horizon FREEPORT MCMORAN INC 4375 is expected to under-perform the Shoe Carnival. But the bond apears to be less risky and, when comparing its historical volatility, FREEPORT MCMORAN INC 4375 is 3.08 times less risky than Shoe Carnival. The bond trades about 0.0 of its potential returns per unit of risk. The Shoe Carnival is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,501  in Shoe Carnival on October 4, 2024 and sell it today you would earn a total of  807.00  from holding Shoe Carnival or generate 32.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.56%
Values	Daily Returns

FREEPORT MCMORAN INC 4375  vs.  Shoe Carnival

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 4375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with FREEPORT and Shoe Carnival

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

The idea behind FREEPORT MCMORAN INC 4375 and Shoe Carnival 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.