Correlation Between Floor Decor and PetMed Express
Can any of the company-specific risk be diversified away by investing in both Floor Decor and PetMed Express 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 Floor Decor and PetMed Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floor Decor Holdings and PetMed Express, you can compare the effects of market volatilities on Floor Decor and PetMed Express 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 Floor Decor with a short position of PetMed Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floor Decor and PetMed Express.
Diversification Opportunities for Floor Decor and PetMed Express
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Floor and PetMed is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings and PetMed Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetMed Express and Floor Decor 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 Floor Decor Holdings are associated (or correlated) with PetMed Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetMed Express has no effect on the direction of Floor Decor i.e., Floor Decor and PetMed Express go up and down completely randomly.
Pair Corralation between Floor Decor and PetMed Express
Considering the 90-day investment horizon Floor Decor Holdings is expected to generate 0.61 times more return on investment than PetMed Express. However, Floor Decor Holdings is 1.63 times less risky than PetMed Express. It trades about 0.05 of its potential returns per unit of risk. PetMed Express is currently generating about -0.02 per unit of risk. If you would invest 9,171 in Floor Decor Holdings on August 26, 2024 and sell it today you would earn a total of 2,029 from holding Floor Decor Holdings or generate 22.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floor Decor Holdings vs. PetMed Express
Performance |
| Timeline |
| Floor Decor Holdings |
| PetMed Express |
Floor Decor and PetMed Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floor Decor and PetMed Express
The main advantage of trading using opposite Floor Decor and PetMed Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floor Decor position performs unexpectedly, PetMed Express 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 PetMed Express will offset losses from the drop in PetMed Express' long position.| Floor Decor vs. Arhaus Inc | Floor Decor vs. Haverty Furniture Companies | Floor Decor vs. Kirklands | Floor Decor vs. Haverty Furniture Companies |
| PetMed Express vs. Oriental Culture Holding | PetMed Express vs. Hour Loop | PetMed Express vs. Qurate Retail Series | PetMed Express vs. Emerge Commerce |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |