Correlation Between ODP Corp and Best Buy
Can any of the company-specific risk be diversified away by investing in both ODP Corp and Best Buy 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 ODP Corp and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ODP Corp and Best Buy Co, you can compare the effects of market volatilities on ODP Corp and Best Buy 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 ODP Corp with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ODP Corp and Best Buy.
Diversification Opportunities for ODP Corp and Best Buy
Very weak diversification
The 3 months correlation between ODP and Best is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ODP Corp and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and ODP Corp 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 ODP Corp are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of ODP Corp i.e., ODP Corp and Best Buy go up and down completely randomly.
Pair Corralation between ODP Corp and Best Buy
Considering the 90-day investment horizon ODP Corp is expected to under-perform the Best Buy. In addition to that, ODP Corp is 1.66 times more volatile than Best Buy Co. It trades about -0.08 of its total potential returns per unit of risk. Best Buy Co is currently generating about 0.05 per unit of volatility. If you would invest 6,887 in Best Buy Co on November 9, 2024 and sell it today you would earn a total of 1,707 from holding Best Buy Co or generate 24.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ODP Corp vs. Best Buy Co
Performance |
| Timeline |
| ODP Corp |
| Best Buy |
ODP Corp and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ODP Corp and Best Buy
The main advantage of trading using opposite ODP Corp and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ODP Corp position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.| ODP Corp vs. Leslies | ODP Corp vs. Sally Beauty Holdings | ODP Corp vs. 1 800 FLOWERSCOM | ODP Corp vs. Caseys General Stores |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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