Correlation Between Conns and Barnes Noble
Can any of the company-specific risk be diversified away by investing in both Conns and Barnes Noble 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 Conns and Barnes Noble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Conns Inc and Barnes Noble Education, you can compare the effects of market volatilities on Conns and Barnes Noble 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 Conns with a short position of Barnes Noble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conns and Barnes Noble.
Diversification Opportunities for Conns and Barnes Noble
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Conns and Barnes is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Conns Inc and Barnes Noble Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Noble Education and Conns 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 Conns Inc are associated (or correlated) with Barnes Noble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Noble Education has no effect on the direction of Conns i.e., Conns and Barnes Noble go up and down completely randomly.
Pair Corralation between Conns and Barnes Noble
Given the investment horizon of 90 days Conns Inc is expected to generate 0.77 times more return on investment than Barnes Noble. However, Conns Inc is 1.29 times less risky than Barnes Noble. It trades about -0.03 of its potential returns per unit of risk. Barnes Noble Education is currently generating about -0.03 per unit of risk. If you would invest 1,637 in Conns Inc on January 18, 2024 and sell it today you would lose (1,252) from holding Conns Inc or give up 76.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Conns Inc vs. Barnes Noble Education
Performance |
Timeline |
Conns Inc |
Barnes Noble Education |
Conns and Barnes Noble Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Conns and Barnes Noble
The main advantage of trading using opposite Conns and Barnes Noble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Conns position performs unexpectedly, Barnes Noble 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 Barnes Noble will offset losses from the drop in Barnes Noble's long position.The idea behind Conns Inc and Barnes Noble Education 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.Barnes Noble vs. RH | Barnes Noble vs. Best Buy Co | Barnes Noble vs. AutoZone | Barnes Noble vs. Williams Sonoma |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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