Correlation Between Birks and 1StdibsCom

Can any of the company-specific risk be diversified away by investing in both Birks and 1StdibsCom 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 Birks and 1StdibsCom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Birks Group and 1StdibsCom, you can compare the effects of market volatilities on Birks and 1StdibsCom 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 Birks with a short position of 1StdibsCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birks and 1StdibsCom.

Diversification Opportunities for Birks and 1StdibsCom

-0.62

Correlation Coefficient

Birks  1StdibsCom

Excellent diversification

The 3 months correlation between Birks and 1StdibsCom is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Birks Group and 1StdibsCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1StdibsCom and Birks 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 Birks Group are associated (or correlated) with 1StdibsCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1StdibsCom has no effect on the direction of Birks i.e., Birks and 1StdibsCom go up and down completely randomly.

Pair Corralation between Birks and 1StdibsCom

Considering the 90-day investment horizon Birks Group is expected to under-perform the 1StdibsCom. In addition to that, Birks is 1.44 times more volatile than 1StdibsCom. It trades about -0.08 of its total potential returns per unit of risk. 1StdibsCom is currently generating about 0.1 per unit of volatility. If you would invest  468.00  in 1StdibsCom on February 20, 2024 and sell it today you would earn a total of  90.00  from holding 1StdibsCom or generate 19.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Birks Group  vs.  1StdibsCom

Birks Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birks Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

1StdibsCom

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 1StdibsCom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, 1StdibsCom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Birks and 1StdibsCom

The main advantage of trading using opposite Birks and 1StdibsCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birks position performs unexpectedly, 1StdibsCom 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 1StdibsCom will offset losses from the drop in 1StdibsCom's long position.

The idea behind Birks Group and 1StdibsCom 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.