Correlation Between Bridgestone and 4 Less
Can any of the company-specific risk be diversified away by investing in both Bridgestone and 4 Less 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 Bridgestone and 4 Less into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgestone and 4 Less Group, you can compare the effects of market volatilities on Bridgestone and 4 Less 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 Bridgestone with a short position of 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgestone and 4 Less.
Diversification Opportunities for Bridgestone and 4 Less
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bridgestone and FLES is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bridgestone and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group and Bridgestone 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 Bridgestone are associated (or correlated) with 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of Bridgestone i.e., Bridgestone and 4 Less go up and down completely randomly.
Pair Corralation between Bridgestone and 4 Less
Assuming the 90 days horizon Bridgestone is expected to under-perform the 4 Less. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bridgestone is 5.75 times less risky than 4 Less. The pink sheet trades about -0.01 of its potential returns per unit of risk. The 4 Less Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.02 in 4 Less Group on August 29, 2024 and sell it today you would earn a total of 0.00 from holding 4 Less Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgestone vs. 4 Less Group
Performance |
| Timeline |
| Bridgestone |
| 4 Less Group |
Bridgestone and 4 Less Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgestone and 4 Less
The main advantage of trading using opposite Bridgestone and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgestone position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.| Bridgestone vs. Allison Transmission Holdings | Bridgestone vs. Luminar Technologies | Bridgestone vs. Lear Corporation | Bridgestone vs. BorgWarner |
| 4 Less vs. Allison Transmission Holdings | 4 Less vs. Luminar Technologies | 4 Less vs. Lear Corporation | 4 Less vs. BorgWarner |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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