Correlation Between Build A and Winmark
Can any of the company-specific risk be diversified away by investing in both Build A 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 Build A and Winmark 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 Winmark, you can compare the effects of market volatilities on Build A 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 Build A with a short position of Winmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Build A and Winmark.
Diversification Opportunities for Build A and Winmark
Poor diversification
The 3 months correlation between Build and Winmark is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Build A Bear Workshop and Winmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winmark 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 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 Build A i.e., Build A and Winmark go up and down completely randomly.
Pair Corralation between Build A and Winmark
Considering the 90-day investment horizon Build A is expected to generate 2.97 times less return on investment than Winmark. In addition to that, Build A is 1.35 times more volatile than Winmark. It trades about 0.06 of its total potential returns per unit of risk. Winmark is currently generating about 0.26 per unit of volatility. If you would invest 36,455 in Winmark on August 26, 2024 and sell it today you would earn a total of 3,872 from holding Winmark or generate 10.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Build A Bear Workshop vs. Winmark
Performance |
| Timeline |
| Build A Bear |
| Winmark |
Build A and Winmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Build A and Winmark
The main advantage of trading using opposite Build A and Winmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Build A 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 Build A Bear Workshop 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.| Winmark vs. Mesa Laboratories | Winmark vs. Utah Medical Products | Winmark vs. Weyco Group | Winmark vs. Diamond Hill Investment |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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