Correlation Between New Relic and Ollies Bargain
Can any of the company-specific risk be diversified away by investing in both New Relic and Ollies Bargain 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 New Relic and Ollies Bargain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Relic and Ollies Bargain Outlet, you can compare the effects of market volatilities on New Relic and Ollies Bargain 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 New Relic with a short position of Ollies Bargain. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Relic and Ollies Bargain.
Diversification Opportunities for New Relic and Ollies Bargain
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Ollies is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding New Relic and Ollies Bargain Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ollies Bargain Outlet and New Relic 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 New Relic are associated (or correlated) with Ollies Bargain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ollies Bargain Outlet has no effect on the direction of New Relic i.e., New Relic and Ollies Bargain go up and down completely randomly.
Pair Corralation between New Relic and Ollies Bargain
Given the investment horizon of 90 days New Relic is expected to generate 1.09 times more return on investment than Ollies Bargain. However, New Relic is 1.09 times more volatile than Ollies Bargain Outlet. It trades about 0.07 of its potential returns per unit of risk. Ollies Bargain Outlet is currently generating about 0.05 per unit of risk. If you would invest 5,529 in New Relic on August 25, 2024 and sell it today you would earn a total of 1,635 from holding New Relic or generate 29.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.99% |
| Values | Daily Returns |
New Relic vs. Ollies Bargain Outlet
Performance |
| Timeline |
| New Relic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ollies Bargain Outlet |
New Relic and Ollies Bargain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Relic and Ollies Bargain
The main advantage of trading using opposite New Relic and Ollies Bargain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Relic position performs unexpectedly, Ollies Bargain 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 Ollies Bargain will offset losses from the drop in Ollies Bargain's long position.The idea behind New Relic and Ollies Bargain Outlet 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.| Ollies Bargain vs. Dollar Tree | Ollies Bargain vs. BJs Wholesale Club | Ollies Bargain vs. Dollar General | Ollies Bargain vs. Costco Wholesale Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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