Correlation Between ODP Corp and Winmark

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

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

Diversification Opportunities for ODP Corp and Winmark

-0.69

Correlation Coefficient

ODP Corp  Winmark

Excellent diversification

The 3 months correlation between ODP and Winmark is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ODP Corp and Winmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winmark and ODP 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 ODP Corp are associated (or correlated) with Winmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winmark has no effect on the direction of ODP Corp i.e., ODP Corp and Winmark go up and down completely randomly.

Pair Corralation between ODP Corp and Winmark

Considering the 90-day investment horizon ODP Corp is expected to generate 1.42 times more return on investment than Winmark. However, ODP Corp is 1.42 times more volatile than Winmark. It trades about 0.17 of its potential returns per unit of risk. Winmark is currently generating about 0.06 per unit of risk. If you would invest  2,537  in ODP Corp on September 15, 2024 and sell it today you would earn a total of  260.00  from holding ODP Corp or generate 10.25% return on investment over 90 days.

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

ODP Corp  vs.  Winmark

ODP Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ODP Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, ODP Corp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Winmark

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Winmark are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Winmark sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ODP Corp and Winmark

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

The idea behind ODP Corp and Winmark 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.