Correlation Between Bridgestone Corp and 4 Less
Can any of the company-specific risk be diversified away by investing in both Bridgestone Corp 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 Corp 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 Corp ADR and 4 Less Group, you can compare the effects of market volatilities on Bridgestone Corp 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 Corp with a short position of 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgestone Corp and 4 Less.
Diversification Opportunities for Bridgestone Corp and 4 Less
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bridgestone and FLES is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bridgestone Corp ADR 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 Corp 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 Corp ADR 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 Corp i.e., Bridgestone Corp and 4 Less go up and down completely randomly.
Pair Corralation between Bridgestone Corp and 4 Less
Assuming the 90 days horizon Bridgestone Corp ADR is expected to generate 0.11 times more return on investment than 4 Less. However, Bridgestone Corp ADR is 8.95 times less risky than 4 Less. It trades about -0.16 of its potential returns per unit of risk. 4 Less Group is currently generating about -0.21 per unit of risk. If you would invest 1,821 in Bridgestone Corp ADR on August 25, 2024 and sell it today you would lose (76.00) from holding Bridgestone Corp ADR or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bridgestone Corp ADR vs. 4 Less Group
Performance |
| Timeline |
| Bridgestone Corp ADR |
| 4 Less Group |
Bridgestone Corp and 4 Less Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgestone Corp and 4 Less
The main advantage of trading using opposite Bridgestone Corp and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgestone Corp 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 Corp vs. Allison Transmission Holdings | Bridgestone Corp vs. Luminar Technologies | Bridgestone Corp vs. Lear Corporation | Bridgestone Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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