Correlation Between Peoples Educational and Shoe Carnival

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

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

Diversification Opportunities for Peoples Educational and Shoe Carnival

0.28

Correlation Coefficient

Peoples Educational  Shoe Carnival

Modest diversification

The 3 months correlation between Peoples and Shoe is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Educational Holdings and Shoe Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoe Carnival and Peoples Educational 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 Peoples Educational Holdings 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 Peoples Educational i.e., Peoples Educational and Shoe Carnival go up and down completely randomly.

Pair Corralation between Peoples Educational and Shoe Carnival

Given the investment horizon of 90 days Peoples Educational Holdings is expected to generate 17.74 times more return on investment than Shoe Carnival. However, Peoples Educational is 17.74 times more volatile than Shoe Carnival. It trades about 0.05 of its potential returns per unit of risk. Shoe Carnival is currently generating about 0.05 per unit of risk. If you would invest  0.01  in Peoples Educational Holdings on September 12, 2024 and sell it today you would earn a total of  0.99  from holding Peoples Educational Holdings or generate 9900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.17%
Values	Daily Returns

Peoples Educational Holdings  vs.  Shoe Carnival

Peoples Educational

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peoples Educational Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Shoe Carnival

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shoe Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Shoe Carnival is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Peoples Educational and Shoe Carnival

The main advantage of trading using opposite Peoples Educational and Shoe Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Educational 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 Peoples Educational Holdings 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.