Correlation Between PriceSmart and Big Lots
Can any of the company-specific risk be diversified away by investing in both PriceSmart 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 PriceSmart and Big Lots into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PriceSmart and Big Lots, you can compare the effects of market volatilities on PriceSmart 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 PriceSmart with a short position of Big Lots. Check out your portfolio center. Please also check ongoing floating volatility patterns of PriceSmart and Big Lots.
Diversification Opportunities for PriceSmart and Big Lots
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PriceSmart and Big is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PriceSmart and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots and PriceSmart 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 PriceSmart 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 PriceSmart i.e., PriceSmart and Big Lots go up and down completely randomly.
Pair Corralation between PriceSmart and Big Lots
Given the investment horizon of 90 days PriceSmart is expected to generate 0.29 times more return on investment than Big Lots. However, PriceSmart is 3.42 times less risky than Big Lots. It trades about 0.01 of its potential returns per unit of risk. Big Lots is currently generating about -0.04 per unit of risk. If you would invest 8,075 in PriceSmart on January 24, 2024 and sell it today you would earn a total of 16.00 from holding PriceSmart or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PriceSmart vs. Big Lots
Performance |
| Timeline |
| PriceSmart |
| Big Lots |
PriceSmart and Big Lots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PriceSmart and Big Lots
The main advantage of trading using opposite PriceSmart and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PriceSmart 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.| PriceSmart vs. Big Lots | PriceSmart vs. Aquagold International | PriceSmart vs. Thrivent High Yield | PriceSmart vs. Morningstar Unconstrained Allocation |
| 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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