Correlation Between VOXX International and Carters

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

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

Diversification Opportunities for VOXX International and Carters

-0.16

Correlation Coefficient

VOXX International  Carters

Good diversification

The 3 months correlation between VOXX and Carters is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding VOXX International and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and VOXX International 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 VOXX International are associated (or correlated) with Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of VOXX International i.e., VOXX International and Carters go up and down completely randomly.

Pair Corralation between VOXX International and Carters

Given the investment horizon of 90 days VOXX International is expected to generate 1.63 times more return on investment than Carters. However, VOXX International is 1.63 times more volatile than Carters. It trades about 0.08 of its potential returns per unit of risk. Carters is currently generating about -0.09 per unit of risk. If you would invest  621.00  in VOXX International on October 1, 2024 and sell it today you would earn a total of  108.00  from holding VOXX International or generate 17.39% return on investment over 90 days.

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

VOXX International  vs.  Carters

VOXX International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, VOXX International showed solid returns over the last few months and may actually be approaching a breakup point.

Carters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic 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.

Pair Trading with VOXX International and Carters

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

The idea behind VOXX International and Carters 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.