Correlation Between Big 5 and Envela Corp

Can any of the company-specific risk be diversified away by investing in both Big 5 and Envela Corp 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 5 and Envela Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big 5 Sporting and Envela Corp, you can compare the effects of market volatilities on Big 5 and Envela Corp 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 5 with a short position of Envela Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and Envela Corp.

Diversification Opportunities for Big 5 and Envela Corp

0.1

Correlation Coefficient

Big 5  Envela Corp

Average diversification

The 3 months correlation between Big and Envela is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp and Big 5 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 5 Sporting are associated (or correlated) with Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of Big 5 i.e., Big 5 and Envela Corp go up and down completely randomly.

Pair Corralation between Big 5 and Envela Corp

Given the investment horizon of 90 days Big 5 Sporting is expected to under-perform the Envela Corp. In addition to that, Big 5 is 2.19 times more volatile than Envela Corp. It trades about -0.11 of its total potential returns per unit of risk. Envela Corp is currently generating about 0.0 per unit of volatility. If you would invest  444.00  in Envela Corp on January 26, 2024 and sell it today you would lose (2.00) from holding Envela Corp or give up 0.45% of portfolio value over 90 days.

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

Big 5 Sporting  vs.  Envela Corp

Big 5 Sporting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big 5 Sporting 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 technical and fundamental indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Envela Corp

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Envela Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Envela Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Big 5 and Envela Corp

The main advantage of trading using opposite Big 5 and Envela Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, Envela Corp 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 Envela Corp will offset losses from the drop in Envela Corp's long position.

The idea behind Big 5 Sporting and Envela Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.