Correlation Between Boot Barn and Xcel Brands

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

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

Diversification Opportunities for Boot Barn and Xcel Brands

-0.58

Correlation Coefficient

Boot Barn  Xcel Brands

Excellent diversification

The 3 months correlation between Boot and Xcel is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Xcel Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Brands and Boot Barn 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 Boot Barn Holdings are associated (or correlated) with Xcel Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Brands has no effect on the direction of Boot Barn i.e., Boot Barn and Xcel Brands go up and down completely randomly.

Pair Corralation between Boot Barn and Xcel Brands

Given the investment horizon of 90 days Boot Barn Holdings is expected to generate 0.6 times more return on investment than Xcel Brands. However, Boot Barn Holdings is 1.67 times less risky than Xcel Brands. It trades about 0.26 of its potential returns per unit of risk. Xcel Brands is currently generating about -0.08 per unit of risk. If you would invest  10,441  in Boot Barn Holdings on April 29, 2025 and sell it today you would earn a total of  7,010  from holding Boot Barn Holdings or generate 67.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Boot Barn Holdings  vs.  Xcel Brands

Boot Barn Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boot Barn Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Boot Barn unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xcel Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xcel Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Boot Barn and Xcel Brands

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

The idea behind Boot Barn Holdings and Xcel Brands 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.