Correlation Between Conns and 1 800
Can any of the company-specific risk be diversified away by investing in both Conns and 1 800 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 Conns and 1 800 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Conns Inc and 1 800 FLOWERSCOM, you can compare the effects of market volatilities on Conns and 1 800 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 Conns with a short position of 1 800. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conns and 1 800.
Diversification Opportunities for Conns and 1 800
Good diversification
The 3 months correlation between Conns and FLWS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Conns Inc and 1 800 FLOWERSCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1 800 FLOWERSCOM and Conns 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 Conns Inc are associated (or correlated) with 1 800. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1 800 FLOWERSCOM has no effect on the direction of Conns i.e., Conns and 1 800 go up and down completely randomly.
Pair Corralation between Conns and 1 800
Given the investment horizon of 90 days Conns Inc is expected to under-perform the 1 800. In addition to that, Conns is 6.48 times more volatile than 1 800 FLOWERSCOM. It trades about -0.45 of its total potential returns per unit of risk. 1 800 FLOWERSCOM is currently generating about -0.05 per unit of volatility. If you would invest 934.00 in 1 800 FLOWERSCOM on August 24, 2024 and sell it today you would lose (171.00) from holding 1 800 FLOWERSCOM or give up 18.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 43.2% |
| Values | Daily Returns |
Conns Inc vs. 1 800 FLOWERSCOM
Performance |
| Timeline |
| Conns Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| 1 800 FLOWERSCOM |
Conns and 1 800 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Conns and 1 800
The main advantage of trading using opposite Conns and 1 800 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Conns position performs unexpectedly, 1 800 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 1 800 will offset losses from the drop in 1 800's long position.The idea behind Conns Inc and 1 800 FLOWERSCOM 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.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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