Correlation Between Best Buy and Dufry AG
Can any of the company-specific risk be diversified away by investing in both Best Buy and Dufry AG 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 Best Buy and Dufry AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Best Buy Co and Dufry AG, you can compare the effects of market volatilities on Best Buy and Dufry AG 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 Best Buy with a short position of Dufry AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Best Buy and Dufry AG.
Diversification Opportunities for Best Buy and Dufry AG
Modest diversification
The 3 months correlation between Best and Dufry is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Best Buy Co and Dufry AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dufry AG and Best Buy 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 Best Buy Co are associated (or correlated) with Dufry AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dufry AG has no effect on the direction of Best Buy i.e., Best Buy and Dufry AG go up and down completely randomly.
Pair Corralation between Best Buy and Dufry AG
Considering the 90-day investment horizon Best Buy Co is expected to generate 0.76 times more return on investment than Dufry AG. However, Best Buy Co is 1.31 times less risky than Dufry AG. It trades about 0.03 of its potential returns per unit of risk. Dufry AG is currently generating about -0.01 per unit of risk. If you would invest 8,613 in Best Buy Co on September 2, 2024 and sell it today you would earn a total of 387.00 from holding Best Buy Co or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Best Buy Co vs. Dufry AG
Performance |
| Timeline |
| Best Buy |
| Dufry AG |
Best Buy and Dufry AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Best Buy and Dufry AG
The main advantage of trading using opposite Best Buy and Dufry AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Best Buy position performs unexpectedly, Dufry AG 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 Dufry AG will offset losses from the drop in Dufry AG's long position.The idea behind Best Buy Co and Dufry AG 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.| Dufry AG vs. Ulta Beauty | Dufry AG vs. Williams Sonoma | Dufry AG vs. Dicks Sporting Goods | Dufry AG vs. Best Buy Co |
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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