Correlation Between Continental and Crocs

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

By analyzing existing cross correlation between Caleres and Crocs Inc, you can compare the effects of market volatilities on Continental and Crocs 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 Crocs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Crocs.

Diversification Opportunities for Continental and Crocs

0.68

Correlation Coefficient

Continental  Crocs

Poor diversification

The 3 months correlation between Continental and Crocs is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Caleres and Crocs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crocs Inc 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 Crocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crocs Inc has no effect on the direction of Continental i.e., Continental and Crocs go up and down completely randomly.

Pair Corralation between Continental and Crocs

Considering the 90-day investment horizon Caleres is expected to under-perform the Crocs. In addition to that, Continental is 1.79 times more volatile than Crocs Inc. It trades about -0.02 of its total potential returns per unit of risk. Crocs Inc is currently generating about 0.03 per unit of volatility. If you would invest  9,749  in Crocs Inc on May 2, 2025 and sell it today you would earn a total of  314.50  from holding Crocs Inc or generate 3.23% return on investment over 90 days.

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

Caleres  vs.  Crocs Inc

Continental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Crocs Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crocs Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Crocs is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Continental and Crocs

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

The idea behind Caleres and Crocs Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.