Correlation Between Franchise and Five Below
Can any of the company-specific risk be diversified away by investing in both Franchise 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 Franchise and Five Below into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franchise Group and Five Below, you can compare the effects of market volatilities on Franchise 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 Franchise with a short position of Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franchise and Five Below.
Diversification Opportunities for Franchise and Five Below
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franchise and Five is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Franchise Group and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Franchise 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 Franchise Group 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 Franchise i.e., Franchise and Five Below go up and down completely randomly.
Pair Corralation between Franchise and Five Below
If you would invest 9,161 in Five Below on September 25, 2024 and sell it today you would earn a total of 1,589 from holding Five Below or generate 17.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 4.76% |
Values | Daily Returns |
Franchise Group vs. Five Below
Performance |
Timeline |
Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Five Below |
Franchise and Five Below Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franchise and Five Below
The main advantage of trading using opposite Franchise and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franchise 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.Franchise vs. Mega Uranium | Franchise vs. Laramide Resources | Franchise vs. NXG NextGen Infrastructure | Franchise vs. Pinetree Capital |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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