Correlation Between Charles Colvard and Signet Jewelers

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

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

Diversification Opportunities for Charles Colvard and Signet Jewelers

0.11

Correlation Coefficient

Charles Colvard  Signet Jewelers

Average diversification

The 3 months correlation between Charles and Signet is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Charles Colvard and Signet Jewelers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signet Jewelers and Charles Colvard 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 Charles Colvard are associated (or correlated) with Signet Jewelers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signet Jewelers has no effect on the direction of Charles Colvard i.e., Charles Colvard and Signet Jewelers go up and down completely randomly.

Pair Corralation between Charles Colvard and Signet Jewelers

Given the investment horizon of 90 days Charles Colvard is expected to generate 2.58 times more return on investment than Signet Jewelers. However, Charles Colvard is 2.58 times more volatile than Signet Jewelers. It trades about 0.09 of its potential returns per unit of risk. Signet Jewelers is currently generating about -0.31 per unit of risk. If you would invest  131.00  in Charles Colvard on September 23, 2024 and sell it today you would earn a total of  14.00  from holding Charles Colvard or generate 10.69% return on investment over 90 days.

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

Charles Colvard  vs.  Signet Jewelers

Charles Colvard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charles Colvard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Charles Colvard is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Signet Jewelers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signet Jewelers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Charles Colvard and Signet Jewelers

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

The idea behind Charles Colvard and Signet Jewelers 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.