Correlation Between Continental and Boot Barn

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

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

Diversification Opportunities for Continental and Boot Barn

-0.29

Correlation Coefficient

Continental  Boot Barn

Very good diversification

The 3 months correlation between Continental and Boot is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Caleres and Boot Barn Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boot Barn Holdings and Continental 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 Caleres are associated (or correlated) with Boot Barn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boot Barn Holdings has no effect on the direction of Continental i.e., Continental and Boot Barn go up and down completely randomly.

Pair Corralation between Continental and Boot Barn

Considering the 90-day investment horizon Continental is expected to generate 10.6 times less return on investment than Boot Barn. In addition to that, Continental is 1.36 times more volatile than Boot Barn Holdings. It trades about 0.02 of its total potential returns per unit of risk. Boot Barn Holdings is currently generating about 0.27 per unit of volatility. If you would invest  10,434  in Boot Barn Holdings on April 30, 2025 and sell it today you would earn a total of  7,432  from holding Boot Barn Holdings or generate 71.23% return on investment over 90 days.

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

Caleres  vs.  Boot Barn Holdings

Continental

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Caleres are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Continental is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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 21 (%) 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.

Pair Trading with Continental and Boot Barn

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

The idea behind Caleres and Boot Barn Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.