Correlation Between Big Lots and Ollies Bargain
Can any of the company-specific risk be diversified away by investing in both Big Lots and Ollies Bargain 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 Ollies Bargain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Lots and Ollies Bargain Outlet, you can compare the effects of market volatilities on Big Lots and Ollies Bargain 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 Ollies Bargain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Lots and Ollies Bargain.
Diversification Opportunities for Big Lots and Ollies Bargain
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Big and Ollies is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Big Lots and Ollies Bargain Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ollies Bargain Outlet 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 Ollies Bargain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ollies Bargain Outlet has no effect on the direction of Big Lots i.e., Big Lots and Ollies Bargain go up and down completely randomly.
Pair Corralation between Big Lots and Ollies Bargain
Considering the 90-day investment horizon Big Lots is expected to under-perform the Ollies Bargain. In addition to that, Big Lots is 2.03 times more volatile than Ollies Bargain Outlet. It trades about -0.09 of its total potential returns per unit of risk. Ollies Bargain Outlet is currently generating about -0.08 per unit of volatility. If you would invest 7,936 in Ollies Bargain Outlet on January 25, 2024 and sell it today you would lose (414.00) from holding Ollies Bargain Outlet or give up 5.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Lots vs. Ollies Bargain Outlet
Performance |
| Timeline |
| Big Lots |
| Ollies Bargain Outlet |
Big Lots and Ollies Bargain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Lots and Ollies Bargain
The main advantage of trading using opposite Big Lots and Ollies Bargain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Lots position performs unexpectedly, Ollies Bargain 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 Ollies Bargain will offset losses from the drop in Ollies Bargain's long position.The idea behind Big Lots and Ollies Bargain Outlet 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.| Ollies Bargain vs. PriceSmart | Ollies Bargain vs. BBB Foods | Ollies Bargain vs. Costco Wholesale Corp | Ollies Bargain vs. Wayfair |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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