Correlation Between Pure Storage and Hollywood Bowl

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Can any of the company-specific risk be diversified away by investing in both Pure Storage and Hollywood Bowl 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 Pure Storage and Hollywood Bowl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and Hollywood Bowl Group, you can compare the effects of market volatilities on Pure Storage and Hollywood Bowl 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 Pure Storage with a short position of Hollywood Bowl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and Hollywood Bowl.

Diversification Opportunities for Pure Storage and Hollywood Bowl

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Pure and Hollywood is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Hollywood Bowl Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Bowl Group and Pure Storage 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 Pure Storage are associated (or correlated) with Hollywood Bowl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Bowl Group has no effect on the direction of Pure Storage i.e., Pure Storage and Hollywood Bowl go up and down completely randomly.

Pair Corralation between Pure Storage and Hollywood Bowl

Assuming the 90 days horizon Pure Storage is expected to generate 2.39 times more return on investment than Hollywood Bowl. However, Pure Storage is 2.39 times more volatile than Hollywood Bowl Group. It trades about 0.14 of its potential returns per unit of risk. Hollywood Bowl Group is currently generating about 0.09 per unit of risk. If you would invest  4,490  in Pure Storage on September 17, 2024 and sell it today you would earn a total of  1,567  from holding Pure Storage or generate 34.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Pure Storage  vs.  Hollywood Bowl Group

 Performance 
       Timeline  
Pure Storage 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.
Hollywood Bowl Group 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hollywood Bowl Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hollywood Bowl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pure Storage and Hollywood Bowl Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pure Storage and Hollywood Bowl

The main advantage of trading using opposite Pure Storage and Hollywood Bowl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage position performs unexpectedly, Hollywood Bowl 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 Hollywood Bowl will offset losses from the drop in Hollywood Bowl's long position.
The idea behind Pure Storage and Hollywood Bowl Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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