Correlation Between Big 5 and ANTA SPORTS
Can any of the company-specific risk be diversified away by investing in both Big 5 and ANTA SPORTS 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 Big 5 and ANTA SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and ANTA SPORTS PRODUCT, you can compare the effects of market volatilities on Big 5 and ANTA SPORTS 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 Big 5 with a short position of ANTA SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and ANTA SPORTS.
Diversification Opportunities for Big 5 and ANTA SPORTS
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Big and ANTA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and ANTA SPORTS PRODUCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA SPORTS PRODUCT and Big 5 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 Big 5 Sporting are associated (or correlated) with ANTA SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANTA SPORTS PRODUCT has no effect on the direction of Big 5 i.e., Big 5 and ANTA SPORTS go up and down completely randomly.
Pair Corralation between Big 5 and ANTA SPORTS
Assuming the 90 days horizon Big 5 Sporting is expected to under-perform the ANTA SPORTS. In addition to that, Big 5 is 2.37 times more volatile than ANTA SPORTS PRODUCT. It trades about -0.11 of its total potential returns per unit of risk. ANTA SPORTS PRODUCT is currently generating about -0.25 per unit of volatility. If you would invest 1,050 in ANTA SPORTS PRODUCT on August 28, 2024 and sell it today you would lose (115.00) from holding ANTA SPORTS PRODUCT or give up 10.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big 5 Sporting vs. ANTA SPORTS PRODUCT
Performance |
| Timeline |
| Big 5 Sporting |
| ANTA SPORTS PRODUCT |
Big 5 and ANTA SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and ANTA SPORTS
The main advantage of trading using opposite Big 5 and ANTA SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, ANTA SPORTS 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 ANTA SPORTS will offset losses from the drop in ANTA SPORTS's long position.The idea behind Big 5 Sporting and ANTA SPORTS PRODUCT 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.| ANTA SPORTS vs. Apple Inc | ANTA SPORTS vs. Apple Inc | ANTA SPORTS vs. Microsoft | ANTA SPORTS vs. Microsoft |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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