Correlation Between Big Lots and JC Penney
Can any of the company-specific risk be diversified away by investing in both Big Lots and JC Penney 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 Big Lots and JC Penney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Lots and J C Penney, you can compare the effects of market volatilities on Big Lots and JC Penney 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 Big Lots with a short position of JC Penney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Lots and JC Penney.
Diversification Opportunities for Big Lots and JC Penney
Pay attention - limited upside
The 3 months correlation between Big and JCP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Big Lots and J C Penney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J C Penney and Big Lots 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 Big Lots are associated (or correlated) with JC Penney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J C Penney has no effect on the direction of Big Lots i.e., Big Lots and JC Penney go up and down completely randomly.
Pair Corralation between Big Lots and JC Penney
If you would invest (100.00) in J C Penney on December 29, 2023 and sell it today you would earn a total of 100.00 from holding J C Penney or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Big Lots vs. J C Penney
Performance |
Timeline |
Big Lots |
J C Penney |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Big Lots and JC Penney Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Big Lots and JC Penney
The main advantage of trading using opposite Big Lots and JC Penney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Lots position performs unexpectedly, JC Penney 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 JC Penney will offset losses from the drop in JC Penney's long position.The idea behind Big Lots and J C Penney pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.JC Penney vs. NorthWestern | JC Penney vs. Black Hills | JC Penney vs. Kinetik Holdings | JC Penney vs. Nabors Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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