Correlation Between Five Below and U Power
Can any of the company-specific risk be diversified away by investing in both Five Below and U Power 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 Five Below and U Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Below and U Power Limited, you can compare the effects of market volatilities on Five Below and U Power 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 Five Below with a short position of U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Below and U Power.
Diversification Opportunities for Five Below and U Power
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Five and UCAR is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Five Below and U Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Power Limited and Five Below 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 Five Below are associated (or correlated) with U Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Power Limited has no effect on the direction of Five Below i.e., Five Below and U Power go up and down completely randomly.
Pair Corralation between Five Below and U Power
Given the investment horizon of 90 days Five Below is expected to generate 0.84 times more return on investment than U Power. However, Five Below is 1.19 times less risky than U Power. It trades about -0.01 of its potential returns per unit of risk. U Power Limited is currently generating about -0.22 per unit of risk. If you would invest 9,479 in Five Below on September 1, 2024 and sell it today you would lose (209.00) from holding Five Below or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Below vs. U Power Limited
Performance |
| Timeline |
| Five Below |
| U Power Limited |
Five Below and U Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Below and U Power
The main advantage of trading using opposite Five Below and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Below position performs unexpectedly, U Power 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 U Power will offset losses from the drop in U Power's long position.| Five Below vs. OReilly Automotive | Five Below vs. AutoZone | Five Below vs. Genuine Parts Co | Five Below vs. Williams Sonoma |
| U Power vs. Advance Auto Parts | U Power vs. Tractor Supply | U Power vs. Genuine Parts Co | U Power vs. Five Below |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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