Correlation Between Conns and Pet Acquisition

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

By analyzing existing cross correlation between Conns Inc and Pet Acquisition LLC, you can compare the effects of market volatilities on Conns and Pet Acquisition 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 Pet Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conns and Pet Acquisition.

Diversification Opportunities for Conns and Pet Acquisition

0.46

Correlation Coefficient

Conns  Pet Acquisition

Very weak diversification

The 3 months correlation between Conns and Pet is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Conns Inc and Pet Acquisition LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Acquisition LLC 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 Pet Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Acquisition LLC has no effect on the direction of Conns i.e., Conns and Pet Acquisition go up and down completely randomly.

Pair Corralation between Conns and Pet Acquisition

If you would invest (100.00) in Conns Inc on September 25, 2024 and sell it today you would earn a total of  100.00  from holding Conns Inc or generate -100.0% return on investment over 90 days.

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

Conns Inc  vs.  Pet Acquisition LLC

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.

Pet Acquisition LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pet Acquisition LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pet Acquisition is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Conns and Pet Acquisition

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

The idea behind Conns Inc and Pet Acquisition LLC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.