Correlation Between Carters and L Brands

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

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

Diversification Opportunities for Carters and L Brands

-0.14
  Correlation Coefficient
Carters
L Brands

Good diversification

The 3 months correlation between Carters and L Brands is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Carters and L Brands Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on L Brands and Carters 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 Carters are associated (or correlated) with L Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Brands has no effect on the direction of Carters i.e., Carters and L Brands go up and down completely randomly.

Pair Corralation between Carters and L Brands

If you would invest  8,793  in Carters on June 23, 2021 and sell it today you would earn a total of  648.00  from holding Carters or generate 7.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Carters  vs.  L Brands Inc

 Performance (%) 
      Timeline 
Carters 
 Carters Performance
0 of 100
Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Carters Price Channel

L Brands 
 L Brands Performance
0 of 100
Over the last 90 days L Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, L Brands is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Carters and L Brands Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Carters and L Brands

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

L Brands

Pair trading matchups for L Brands

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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