Correlation Between Shoe Carnival and SIMON

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

By analyzing existing cross correlation between Shoe Carnival and SIMON PPTY GROUP, you can compare the effects of market volatilities on Shoe Carnival and SIMON 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 Shoe Carnival with a short position of SIMON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and SIMON.

Diversification Opportunities for Shoe Carnival and SIMON

0.03

Correlation Coefficient

Shoe Carnival  SIMON

Significant diversification

The 3 months correlation between Shoe and SIMON is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP and Shoe Carnival 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 Shoe Carnival are associated (or correlated) with SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and SIMON go up and down completely randomly.

Pair Corralation between Shoe Carnival and SIMON

Given the investment horizon of 90 days Shoe Carnival is expected to generate 0.69 times more return on investment than SIMON. However, Shoe Carnival is 1.44 times less risky than SIMON. It trades about 0.1 of its potential returns per unit of risk. SIMON PPTY GROUP is currently generating about -0.02 per unit of risk. If you would invest  1,904  in Shoe Carnival on May 27, 2025 and sell it today you would earn a total of  316.00  from holding Shoe Carnival or generate 16.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	65.63%
Values	Daily Returns

Shoe Carnival  vs.  SIMON PPTY GROUP

Shoe Carnival

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Shoe Carnival are ranked lower than 7 (%) 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.

SIMON PPTY GROUP

Risk-Adjusted Performance

Weakest

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shoe Carnival and SIMON

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

The idea behind Shoe Carnival and SIMON PPTY GROUP 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.