Correlation Between SIGNA Sports and Franchise
Can any of the company-specific risk be diversified away by investing in both SIGNA Sports and Franchise 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 SIGNA Sports and Franchise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIGNA Sports United and Franchise Group, you can compare the effects of market volatilities on SIGNA Sports and Franchise 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 SIGNA Sports with a short position of Franchise. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIGNA Sports and Franchise.
Diversification Opportunities for SIGNA Sports and Franchise
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SIGNA and Franchise is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SIGNA Sports United and Franchise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franchise Group and SIGNA Sports 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 SIGNA Sports United are associated (or correlated) with Franchise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franchise Group has no effect on the direction of SIGNA Sports i.e., SIGNA Sports and Franchise go up and down completely randomly.
Pair Corralation between SIGNA Sports and Franchise
Considering the 90-day investment horizon SIGNA Sports United is expected to under-perform the Franchise. In addition to that, SIGNA Sports is 10.16 times more volatile than Franchise Group. It trades about -0.04 of its total potential returns per unit of risk. Franchise Group is currently generating about 0.11 per unit of volatility. If you would invest 2,917 in Franchise Group on August 31, 2024 and sell it today you would earn a total of 53.00 from holding Franchise Group or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIGNA Sports United vs. Franchise Group
Performance |
| Timeline |
| SIGNA Sports United |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SIGNA Sports and Franchise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIGNA Sports and Franchise
The main advantage of trading using opposite SIGNA Sports and Franchise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIGNA Sports position performs unexpectedly, Franchise 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 Franchise will offset losses from the drop in Franchise's long position.| SIGNA Sports vs. Sally Beauty Holdings | SIGNA Sports vs. National Vision Holdings | SIGNA Sports vs. MarineMax | SIGNA Sports vs. Caseys General Stores |
| Franchise vs. Mega Uranium | Franchise vs. Laramide Resources | Franchise vs. NXG NextGen Infrastructure | Franchise vs. Pinetree Capital |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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