Correlation Between U1566PAD7 and Carters

Can any of the company-specific risk be diversified away by investing in both U1566PAD7 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 U1566PAD7 and Carters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LUMN 45 15 JAN 29 and Carters, you can compare the effects of market volatilities on U1566PAD7 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 U1566PAD7 with a short position of Carters. Check out your portfolio center. Please also check ongoing floating volatility patterns of U1566PAD7 and Carters.

Diversification Opportunities for U1566PAD7 and Carters

-0.7

Correlation Coefficient

U1566PAD7  Carters

Excellent diversification

The 3 months correlation between U1566PAD7 and Carters is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LUMN 45 15 JAN 29 and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and U1566PAD7 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 LUMN 45 15 JAN 29 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 U1566PAD7 i.e., U1566PAD7 and Carters go up and down completely randomly.

Pair Corralation between U1566PAD7 and Carters

Assuming the 90 days trading horizon LUMN 45 15 JAN 29 is expected to under-perform the Carters. In addition to that, U1566PAD7 is 5.82 times more volatile than Carters. It trades about -0.46 of its total potential returns per unit of risk. Carters is currently generating about 0.02 per unit of volatility. If you would invest  5,528  in Carters on September 26, 2024 and sell it today you would earn a total of  23.00  from holding Carters or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	47.62%
Values	Daily Returns

LUMN 45 15 JAN 29  vs.  Carters

LUMN 45 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LUMN 45 15 JAN 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for LUMN 45 15 JAN 29 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 U1566PAD7 and Carters

The main advantage of trading using opposite U1566PAD7 and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U1566PAD7 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 LUMN 45 15 JAN 29 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.