Correlation Between Carters and Century Communities

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

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

Diversification Opportunities for Carters and Century Communities

-0.08

Correlation Coefficient

Carters  Century Communities

Good diversification

The 3 months correlation between Carters and Century is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Carters and Century Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Communities 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 Century Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Communities has no effect on the direction of Carters i.e., Carters and Century Communities go up and down completely randomly.

Pair Corralation between Carters and Century Communities

Considering the 90-day investment horizon Carters is expected to under-perform the Century Communities. In addition to that, Carters is 1.44 times more volatile than Century Communities. It trades about -0.12 of its total potential returns per unit of risk. Century Communities is currently generating about 0.05 per unit of volatility. If you would invest  5,433  in Century Communities on May 4, 2025 and sell it today you would earn a total of  338.00  from holding Century Communities or generate 6.22% return on investment over 90 days.

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

Carters  vs.  Century Communities

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 September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Century Communities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Century Communities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Century Communities may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Carters and Century Communities

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

The idea behind Carters and Century Communities 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..