Correlation Between Envela Corp and Carters

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

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

Diversification Opportunities for Envela Corp and Carters

-0.15

Correlation Coefficient

Envela Corp  Carters

Good diversification

The 3 months correlation between Envela and Carters is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Envela Corp and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters and Envela Corp 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 Envela Corp 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 Envela Corp i.e., Envela Corp and Carters go up and down completely randomly.

Pair Corralation between Envela Corp and Carters

Considering the 90-day investment horizon Envela Corp is expected to generate 1.45 times more return on investment than Carters. However, Envela Corp is 1.45 times more volatile than Carters. It trades about 0.16 of its potential returns per unit of risk. Carters is currently generating about -0.17 per unit of risk. If you would invest  429.00  in Envela Corp on February 21, 2024 and sell it today you would earn a total of  34.00  from holding Envela Corp or generate 7.93% return on investment over 90 days.

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

Envela Corp  vs.  Carters

Envela Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Envela Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Envela Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Envela Corp and Carters

The main advantage of trading using opposite Envela Corp and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envela Corp 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 Envela Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.