Correlation Between Winmark and Five Below
Can any of the company-specific risk be diversified away by investing in both Winmark and Five Below 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 Winmark and Five Below into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winmark and Five Below, you can compare the effects of market volatilities on Winmark and Five Below 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 Winmark with a short position of Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winmark and Five Below.
Diversification Opportunities for Winmark and Five Below
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Winmark and Five is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Winmark 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 Winmark are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of Winmark i.e., Winmark and Five Below go up and down completely randomly.
Pair Corralation between Winmark and Five Below
Given the investment horizon of 90 days Winmark is expected to generate 0.71 times more return on investment than Five Below. However, Winmark is 1.4 times less risky than Five Below. It trades about 0.07 of its potential returns per unit of risk. Five Below is currently generating about -0.04 per unit of risk. If you would invest 23,035 in Winmark on August 27, 2024 and sell it today you would earn a total of 17,292 from holding Winmark or generate 75.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winmark vs. Five Below
Performance |
| Timeline |
| Winmark |
| Five Below |
Winmark and Five Below Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winmark and Five Below
The main advantage of trading using opposite Winmark and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winmark position performs unexpectedly, Five Below 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 Five Below will offset losses from the drop in Five Below's long position.| Winmark vs. Mesa Laboratories | Winmark vs. Utah Medical Products | Winmark vs. Weyco Group | Winmark vs. Diamond Hill Investment |
| Five Below vs. OReilly Automotive | Five Below vs. AutoZone | Five Below vs. Genuine Parts Co | Five Below vs. Williams Sonoma |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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