Correlation Between Pet Acquisition and Five Below
Can any of the company-specific risk be diversified away by investing in both Pet Acquisition 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 Pet Acquisition and Five Below into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pet Acquisition LLC and Five Below, you can compare the effects of market volatilities on Pet Acquisition 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 Pet Acquisition with a short position of Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pet Acquisition and Five Below.
Diversification Opportunities for Pet Acquisition and Five Below
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pet and Five is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pet Acquisition LLC and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Pet Acquisition 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 Pet Acquisition LLC 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 Pet Acquisition i.e., Pet Acquisition and Five Below go up and down completely randomly.
Pair Corralation between Pet Acquisition and Five Below
Given the investment horizon of 90 days Pet Acquisition LLC is expected to under-perform the Five Below. But the stock apears to be less risky and, when comparing its historical volatility, Pet Acquisition LLC is 1.04 times less risky than Five Below. The stock trades about -0.08 of its potential returns per unit of risk. The Five Below is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 9,110 in Five Below on August 27, 2024 and sell it today you would lose (418.00) from holding Five Below or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pet Acquisition LLC vs. Five Below
Performance |
| Timeline |
| Pet Acquisition LLC |
| Five Below |
Pet Acquisition and Five Below Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pet Acquisition and Five Below
The main advantage of trading using opposite Pet Acquisition and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pet Acquisition 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.| Pet Acquisition vs. Oriental Culture Holding | Pet Acquisition vs. Hour Loop | Pet Acquisition vs. Qurate Retail Series | Pet Acquisition vs. Emerge Commerce |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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