Correlation Between Value Capital and Best Buy
Can any of the company-specific risk be diversified away by investing in both Value Capital and Best Buy 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 Value Capital and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Capital One and Best Buy Co, you can compare the effects of market volatilities on Value Capital and Best Buy 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 Value Capital with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Capital and Best Buy.
Diversification Opportunities for Value Capital and Best Buy
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Value and Best is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Value Capital One and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Value Capital 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 Value Capital One are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Value Capital i.e., Value Capital and Best Buy go up and down completely randomly.
Pair Corralation between Value Capital and Best Buy
Assuming the 90 days trading horizon Value Capital One is expected to generate 1.95 times more return on investment than Best Buy. However, Value Capital is 1.95 times more volatile than Best Buy Co. It trades about 0.05 of its potential returns per unit of risk. Best Buy Co is currently generating about 0.07 per unit of risk. If you would invest 3,510 in Value Capital One on January 20, 2024 and sell it today you would earn a total of 390.00 from holding Value Capital One or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 83.74% |
| Values | Daily Returns |
Value Capital One vs. Best Buy Co
Performance |
| Timeline |
| Value Capital One |
| Best Buy |
Value Capital and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Capital and Best Buy
The main advantage of trading using opposite Value Capital and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Capital position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.| Value Capital vs. Migdal Insurance | Value Capital vs. The Phoenix Holdings | Value Capital vs. Harel Insurance Investments | Value Capital vs. Clal Insurance Enterprises |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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