Correlation Between Carters and Boot Barn

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

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

Diversification Opportunities for Carters and Boot Barn

-0.65

Correlation Coefficient

Carters  Boot Barn

Excellent diversification

The 3 months correlation between Carters and Boot is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Carters 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 Carters 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 Carters 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 Carters i.e., Carters and Boot Barn go up and down completely randomly.

Pair Corralation between Carters and Boot Barn

Considering the 90-day investment horizon Carters is expected to under-perform the Boot Barn. But the stock apears to be less risky and, when comparing its historical volatility, Carters is 1.07 times less risky than Boot Barn. The stock trades about -0.07 of its potential returns per unit of risk. The Boot Barn Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  9,154  in Boot Barn Holdings on April 17, 2025 and sell it today you would earn a total of  7,565  from holding Boot Barn Holdings or generate 82.64% return on investment over 90 days.

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

Carters  vs.  Boot Barn Holdings

Carters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 23 (%) 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 Carters and Boot Barn

The main advantage of trading using opposite Carters and Boot Barn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carters 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 Carters 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.