Correlation Between Pure Storage and Big 5
Can any of the company-specific risk be diversified away by investing in both Pure Storage and Big 5 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 Pure Storage and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and Big 5 Sporting, you can compare the effects of market volatilities on Pure Storage and Big 5 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 Pure Storage with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and Big 5.
Diversification Opportunities for Pure Storage and Big 5
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pure and Big is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and Pure Storage 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 Pure Storage are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Pure Storage i.e., Pure Storage and Big 5 go up and down completely randomly.
Pair Corralation between Pure Storage and Big 5
Assuming the 90 days horizon Pure Storage is expected to generate 0.66 times more return on investment than Big 5. However, Pure Storage is 1.51 times less risky than Big 5. It trades about 0.06 of its potential returns per unit of risk. Big 5 Sporting is currently generating about -0.11 per unit of risk. If you would invest 5,000 in Pure Storage on August 28, 2024 and sell it today you would earn a total of 152.00 from holding Pure Storage or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Storage vs. Big 5 Sporting
Performance |
| Timeline |
| Pure Storage |
| Big 5 Sporting |
Pure Storage and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and Big 5
The main advantage of trading using opposite Pure Storage and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| Pure Storage vs. United Utilities Group | Pure Storage vs. MOLSON RS BEVERAGE | Pure Storage vs. GungHo Online Entertainment | Pure Storage vs. Canadian Utilities Limited |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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