Correlation Between Birks and Contextlogic
Can any of the company-specific risk be diversified away by investing in both Birks and Contextlogic 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 Birks and Contextlogic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birks Group and Contextlogic, you can compare the effects of market volatilities on Birks and Contextlogic 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 Birks with a short position of Contextlogic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and Contextlogic.
Diversification Opportunities for Birks and Contextlogic
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Birks and Contextlogic is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and Contextlogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contextlogic and Birks 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 Birks Group are associated (or correlated) with Contextlogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contextlogic has no effect on the direction of Birks i.e., Birks and Contextlogic go up and down completely randomly.
Pair Corralation between Birks and Contextlogic
Considering the 90-day investment horizon Birks Group is expected to under-perform the Contextlogic. But the stock apears to be less risky and, when comparing its historical volatility, Birks Group is 1.5 times less risky than Contextlogic. The stock trades about -0.04 of its potential returns per unit of risk. The Contextlogic is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,909 in Contextlogic on August 27, 2024 and sell it today you would lose (1,199) from holding Contextlogic or give up 62.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Birks Group vs. Contextlogic
Performance |
| Timeline |
| Birks Group |
| Contextlogic |
Birks and Contextlogic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Birks and Contextlogic
The main advantage of trading using opposite Birks and Contextlogic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks position performs unexpectedly, Contextlogic 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 Contextlogic will offset losses from the drop in Contextlogic's long position.The idea behind Birks Group and Contextlogic 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.| Contextlogic vs. Grupo Simec SAB | Contextlogic vs. Titan International | Contextlogic vs. Amkor Technology | Contextlogic vs. Kaiser Aluminum |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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