Correlation Between Build A and Continental
Can any of the company-specific risk be diversified away by investing in both Build A and Continental 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 Build A and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Build A Bear Workshop and Caleres, you can compare the effects of market volatilities on Build A and Continental 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 Build A with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Build A and Continental.
Diversification Opportunities for Build A and Continental
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Build and Continental is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Build A Bear Workshop and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Build A 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 Build A Bear Workshop are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Build A i.e., Build A and Continental go up and down completely randomly.
Pair Corralation between Build A and Continental
Considering the 90-day investment horizon Build A is expected to generate 16.13 times less return on investment than Continental. But when comparing it to its historical volatility, Build A Bear Workshop is 1.19 times less risky than Continental. It trades about 0.01 of its potential returns per unit of risk. Caleres is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,945 in Caleres on August 24, 2024 and sell it today you would earn a total of 218.00 from holding Caleres or generate 7.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Build A Bear Workshop vs. Caleres
Performance |
| Timeline |
| Build A Bear |
| Continental |
Build A and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Build A and Continental
The main advantage of trading using opposite Build A and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Build A position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.The idea behind Build A Bear Workshop and Caleres 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.| Continental vs. Vera Bradley | Continental vs. Wolverine World Wide | Continental vs. Rocky Brands | Continental vs. Steven Madden |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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