Correlation Between Big 5 and 1 800

Can any of the company-specific risk be diversified away by investing in both Big 5 and 1 800 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 Big 5 and 1 800 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big 5 Sporting and 1 800 FLOWERSCOM, you can compare the effects of market volatilities on Big 5 and 1 800 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 Big 5 with a short position of 1 800. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and 1 800.

Diversification Opportunities for Big 5 and 1 800

-0.12

Correlation Coefficient

Big 5  1 800

Good diversification

The 3 months correlation between Big and FLWS is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and 1 800 FLOWERSCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1 800 FLOWERSCOM and Big 5 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 Big 5 Sporting are associated (or correlated) with 1 800. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1 800 FLOWERSCOM has no effect on the direction of Big 5 i.e., Big 5 and 1 800 go up and down completely randomly.

Pair Corralation between Big 5 and 1 800

Given the investment horizon of 90 days Big 5 Sporting is expected to under-perform the 1 800. In addition to that, Big 5 is 1.76 times more volatile than 1 800 FLOWERSCOM. It trades about -0.02 of its total potential returns per unit of risk. 1 800 FLOWERSCOM is currently generating about 0.03 per unit of volatility. If you would invest  803.00  in 1 800 FLOWERSCOM on August 30, 2024 and sell it today you would earn a total of  26.00  from holding 1 800 FLOWERSCOM or generate 3.24% return on investment over 90 days.

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

Big 5 Sporting  vs.  1 800 FLOWERSCOM

Big 5 Sporting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big 5 Sporting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Big 5 is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

1 800 FLOWERSCOM

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 1 800 FLOWERSCOM are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, 1 800 is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Big 5 and 1 800

The main advantage of trading using opposite Big 5 and 1 800 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, 1 800 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 1 800 will offset losses from the drop in 1 800's long position.

The idea behind Big 5 Sporting and 1 800 FLOWERSCOM 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.