Correlation Between Shoe Carnival and Expand Energy

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

By analyzing existing cross correlation between Shoe Carnival and Expand Energy, you can compare the effects of market volatilities on Shoe Carnival and Expand Energy 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 Expand Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoe Carnival and Expand Energy.

Diversification Opportunities for Shoe Carnival and Expand Energy

-0.73

Correlation Coefficient

Shoe Carnival  Expand Energy

Pay attention - limited upside

The 3 months correlation between Shoe and Expand is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shoe Carnival and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy 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 Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Shoe Carnival i.e., Shoe Carnival and Expand Energy go up and down completely randomly.

Pair Corralation between Shoe Carnival and Expand Energy

Given the investment horizon of 90 days Shoe Carnival is expected to under-perform the Expand Energy. In addition to that, Shoe Carnival is 1.58 times more volatile than Expand Energy. It trades about -0.07 of its total potential returns per unit of risk. Expand Energy is currently generating about 0.3 per unit of volatility. If you would invest  7,278  in Expand Energy on September 13, 2024 and sell it today you would earn a total of  2,682  from holding Expand Energy or generate 36.85% return on investment over 90 days.

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

Shoe Carnival  vs.  Expand Energy

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 latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Expand Energy

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expand Energy are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Expand Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shoe Carnival and Expand Energy

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

The idea behind Shoe Carnival and Expand Energy 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.