Correlation Between Boot Barn and Canada Goose

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

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

Diversification Opportunities for Boot Barn and Canada Goose

0.76

Correlation Coefficient

Boot Barn  Canada Goose

Poor diversification

The 3 months correlation between Boot and Canada is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Canada Goose Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Goose Holdings and Boot Barn 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 Boot Barn Holdings are associated (or correlated) with Canada Goose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Goose Holdings has no effect on the direction of Boot Barn i.e., Boot Barn and Canada Goose go up and down completely randomly.

Pair Corralation between Boot Barn and Canada Goose

Given the investment horizon of 90 days Boot Barn Holdings is expected to under-perform the Canada Goose. In addition to that, Boot Barn is 1.22 times more volatile than Canada Goose Holdings. It trades about -0.02 of its total potential returns per unit of risk. Canada Goose Holdings is currently generating about -0.02 per unit of volatility. If you would invest  1,049  in Canada Goose Holdings on September 16, 2024 and sell it today you would lose (57.00) from holding Canada Goose Holdings or give up 5.43% of portfolio value over 90 days.

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

Boot Barn Holdings  vs.  Canada Goose Holdings

Boot Barn Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boot Barn Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Boot Barn is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canada Goose is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Boot Barn and Canada Goose

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

The idea behind Boot Barn Holdings and Canada Goose 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.