Correlation Between Bridgestone Corp and 4 Less

Can any of the company-specific risk be diversified away by investing in both Bridgestone Corp and 4 Less 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 Bridgestone Corp and 4 Less into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bridgestone Corp ADR and 4 Less Group, you can compare the effects of market volatilities on Bridgestone Corp and 4 Less 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 Bridgestone Corp with a short position of 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgestone Corp and 4 Less.

Diversification Opportunities for Bridgestone Corp and 4 Less

0.91

Correlation Coefficient

Bridgestone Corp  4 Less

Almost no diversification

The 3 months correlation between Bridgestone and FLES is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bridgestone Corp ADR and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group and Bridgestone 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 Bridgestone Corp ADR are associated (or correlated) with 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of Bridgestone Corp i.e., Bridgestone Corp and 4 Less go up and down completely randomly.

Pair Corralation between Bridgestone Corp and 4 Less

Assuming the 90 days horizon Bridgestone Corp ADR is expected to generate 0.06 times more return on investment than 4 Less. However, Bridgestone Corp ADR is 17.51 times less risky than 4 Less. It trades about -0.21 of its potential returns per unit of risk. 4 Less Group is currently generating about -0.03 per unit of risk. If you would invest  1,926  in Bridgestone Corp ADR on September 20, 2024 and sell it today you would lose (252.00) from holding Bridgestone Corp ADR or give up 13.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Bridgestone Corp ADR  vs.  4 Less Group

Bridgestone Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgestone Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

4 Less Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4 Less Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Bridgestone Corp and 4 Less

The main advantage of trading using opposite Bridgestone Corp and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgestone Corp position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.

The idea behind Bridgestone Corp ADR and 4 Less 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.