Correlation Between Container Store and High Tide

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

By analyzing existing cross correlation between Container Store Group and High Tide, you can compare the effects of market volatilities on Container Store and High Tide 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 Container Store with a short position of High Tide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Container Store and High Tide.

Diversification Opportunities for Container Store and High Tide

-0.63

Correlation Coefficient

Container Store  High Tide

Excellent diversification

The 3 months correlation between Container and High is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Container Store Group and High Tide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tide and Container Store 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 Container Store Group are associated (or correlated) with High Tide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tide has no effect on the direction of Container Store i.e., Container Store and High Tide go up and down completely randomly.

Pair Corralation between Container Store and High Tide

Considering the 90-day investment horizon Container Store Group is expected to under-perform the High Tide. In addition to that, Container Store is 3.61 times more volatile than High Tide. It trades about -0.11 of its total potential returns per unit of risk. High Tide is currently generating about 0.17 per unit of volatility. If you would invest  219.00  in High Tide on September 15, 2024 and sell it today you would earn a total of  100.00  from holding High Tide or generate 45.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Container Store Group  vs.  High Tide

Container Store Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Container Store Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

High Tide

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in High Tide are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, High Tide demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Container Store and High Tide

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

The idea behind Container Store Group and High Tide 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.