Correlation Between CSL and Shoe Carnival

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Can any of the company-specific risk be diversified away by investing in both CSL and Shoe Carnival 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 CSL and Shoe Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Shoe Carnival, you can compare the effects of market volatilities on CSL and Shoe Carnival 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 CSL with a short position of Shoe Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Shoe Carnival.

Diversification Opportunities for CSL and Shoe Carnival

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between CSL and Shoe is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival and CSL 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 CSL are associated (or correlated) with Shoe Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoe Carnival has no effect on the direction of CSL i.e., CSL and Shoe Carnival go up and down completely randomly.

Pair Corralation between CSL and Shoe Carnival

Assuming the 90 days horizon CSL is expected to generate 1.94 times less return on investment than Shoe Carnival. But when comparing it to its historical volatility, CSL is 1.94 times less risky than Shoe Carnival. It trades about 0.11 of its potential returns per unit of risk. Shoe Carnival is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,769  in Shoe Carnival on April 22, 2025 and sell it today you would earn a total of  329.00  from holding Shoe Carnival or generate 18.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.41%
ValuesDaily Returns

CSL  vs.  Shoe Carnival

 Performance 
       Timeline  
CSL 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CSL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in August 2025.
Shoe Carnival 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Shoe Carnival are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Shoe Carnival disclosed solid returns over the last few months and may actually be approaching a breakup point.

CSL and Shoe Carnival Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CSL and Shoe Carnival

The main advantage of trading using opposite CSL and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Shoe Carnival 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 Shoe Carnival will offset losses from the drop in Shoe Carnival's long position.
The idea behind CSL and Shoe Carnival 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.
Check out your portfolio center.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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