Correlation Between School Specialty and Boomer Holdings
Can any of the company-specific risk be diversified away by investing in both School Specialty and Boomer Holdings 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 School Specialty and Boomer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between School Specialty and Boomer Holdings, you can compare the effects of market volatilities on School Specialty and Boomer Holdings 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 School Specialty with a short position of Boomer Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of School Specialty and Boomer Holdings.
Diversification Opportunities for School Specialty and Boomer Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between School and Boomer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding School Specialty and Boomer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boomer Holdings and School Specialty 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 School Specialty are associated (or correlated) with Boomer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boomer Holdings has no effect on the direction of School Specialty i.e., School Specialty and Boomer Holdings go up and down completely randomly.
Pair Corralation between School Specialty and Boomer Holdings
Given the investment horizon of 90 days School Specialty is expected to generate 4.01 times more return on investment than Boomer Holdings. However, School Specialty is 4.01 times more volatile than Boomer Holdings. It trades about 0.04 of its potential returns per unit of risk. Boomer Holdings is currently generating about -0.01 per unit of risk. If you would invest 0.02 in School Specialty on August 27, 2024 and sell it today you would lose (0.01) from holding School Specialty or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 27.22% |
| Values | Daily Returns |
School Specialty vs. Boomer Holdings
Performance |
| Timeline |
| School Specialty |
| Boomer Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
School Specialty and Boomer Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with School Specialty and Boomer Holdings
The main advantage of trading using opposite School Specialty and Boomer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if School Specialty position performs unexpectedly, Boomer Holdings 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 Boomer Holdings will offset losses from the drop in Boomer Holdings' long position.| School Specialty vs. Card Factory plc | School Specialty vs. Ceconomy AG ADR | School Specialty vs. Bowlin Travel Centers | School Specialty vs. National Vision Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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