Correlation Between Genuine Parts and Build A
Can any of the company-specific risk be diversified away by investing in both Genuine Parts and Build A 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 Genuine Parts and Build A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genuine Parts Co and Build A Bear Workshop, you can compare the effects of market volatilities on Genuine Parts and Build A 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 Genuine Parts with a short position of Build A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genuine Parts and Build A.
Diversification Opportunities for Genuine Parts and Build A
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Genuine and Build is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co and Build A Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build A Bear and Genuine Parts 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 Genuine Parts Co are associated (or correlated) with Build A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build A Bear has no effect on the direction of Genuine Parts i.e., Genuine Parts and Build A go up and down completely randomly.
Pair Corralation between Genuine Parts and Build A
Considering the 90-day investment horizon Genuine Parts Co is expected to under-perform the Build A. But the stock apears to be less risky and, when comparing its historical volatility, Genuine Parts Co is 4.04 times less risky than Build A. The stock trades about -0.12 of its potential returns per unit of risk. The Build A Bear Workshop is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,689 in Build A Bear Workshop on September 18, 2024 and sell it today you would earn a total of 680.50 from holding Build A Bear Workshop or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genuine Parts Co vs. Build A Bear Workshop
Performance |
| Timeline |
| Genuine Parts |
| Build A Bear |
Genuine Parts and Build A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genuine Parts and Build A
The main advantage of trading using opposite Genuine Parts and Build A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts position performs unexpectedly, Build A 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 Build A will offset losses from the drop in Build A's long position.| Genuine Parts vs. Steven Madden | Genuine Parts vs. Vera Bradley | Genuine Parts vs. Caleres | Genuine Parts vs. Wolverine World Wide |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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