Correlation Between Best Buy and Conns

Can any of the company-specific risk be diversified away by investing in both Best Buy and Conns 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 Best Buy and Conns into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Best Buy Co and Conns Inc, you can compare the effects of market volatilities on Best Buy and Conns 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 Best Buy with a short position of Conns. Check out your portfolio center. Please also check ongoing floating volatility patterns of Best Buy and Conns.

Diversification Opportunities for Best Buy and Conns

-0.77

Correlation Coefficient

Best Buy  Conns

Pay attention - limited upside

The 3 months correlation between Best and Conns is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Best Buy Co and Conns Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conns Inc and Best Buy 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 Best Buy Co are associated (or correlated) with Conns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conns Inc has no effect on the direction of Best Buy i.e., Best Buy and Conns go up and down completely randomly.

Pair Corralation between Best Buy and Conns

Considering the 90-day investment horizon Best Buy Co is expected to under-perform the Conns. But the stock apears to be less risky and, when comparing its historical volatility, Best Buy Co is 4.32 times less risky than Conns. The stock trades about -0.22 of its potential returns per unit of risk. The Conns Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  323.00  in Conns Inc on January 26, 2024 and sell it today you would earn a total of  59.00  from holding Conns Inc or generate 18.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Best Buy Co  vs.  Conns Inc

Best Buy

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Best Buy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Conns Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conns Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Best Buy and Conns

The main advantage of trading using opposite Best Buy and Conns positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Best Buy position performs unexpectedly, Conns 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 Conns will offset losses from the drop in Conns' long position.

The idea behind Best Buy Co and Conns Inc 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.