Correlation Between Target and Big Lots
Can any of the company-specific risk be diversified away by investing in both Target and Big Lots 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 Target and Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and Big Lots, you can compare the effects of market volatilities on Target and Big Lots 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 Target with a short position of Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Big Lots.
Diversification Opportunities for Target and Big Lots
Weak diversification
The 3 months correlation between Target and Big is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Target and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots and Target 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 Target are associated (or correlated) with Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Target i.e., Target and Big Lots go up and down completely randomly.
Pair Corralation between Target and Big Lots
If you would invest 13,579 in Target on November 4, 2024 and sell it today you would earn a total of 212.00 from holding Target or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Target vs. Big Lots
Performance |
| Timeline |
| Target |
| Big Lots |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Target and Big Lots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Big Lots
The main advantage of trading using opposite Target and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.| Target vs. Costco Wholesale Corp | Target vs. Dollar Tree | Target vs. BJs Wholesale Club | Target vs. Dollar General |
| Big Lots vs. BJs Wholesale Club | Big Lots vs. Dollar General | Big Lots vs. Costco Wholesale Corp | Big Lots vs. Walmart |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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