Correlation Between Conns and Five Below

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

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

Diversification Opportunities for Conns and Five Below

-0.07

Correlation Coefficient

Conns  Five Below

Good diversification

The 3 months correlation between Conns and Five is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Conns Inc and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Conns 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 Conns Inc are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of Conns i.e., Conns and Five Below go up and down completely randomly.

Pair Corralation between Conns and Five Below

If you would invest  7,628  in Five Below on September 1, 2024 and sell it today you would earn a total of  1,642  from holding Five Below or generate 21.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Conns Inc  vs.  Five Below

Conns Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conns Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Conns is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Five Below

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Five Below are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Five Below exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Conns and Five Below

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

The idea behind Conns Inc and Five Below 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.