Correlation Between Lands End and Big 5

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

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

Diversification Opportunities for Lands End and Big 5

-0.57

Correlation Coefficient

Lands End  Big 5

Excellent diversification

The 3 months correlation between Lands and Big is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and Lands End 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 Lands End are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Lands End i.e., Lands End and Big 5 go up and down completely randomly.

Pair Corralation between Lands End and Big 5

Allowing for the 90-day total investment horizon Lands End is expected to generate 1.17 times more return on investment than Big 5. However, Lands End is 1.17 times more volatile than Big 5 Sporting. It trades about 0.39 of its potential returns per unit of risk. Big 5 Sporting is currently generating about -0.11 per unit of risk. If you would invest  930.00  in Lands End on January 26, 2024 and sell it today you would earn a total of  380.00  from holding Lands End or generate 40.86% return on investment over 90 days.

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

Lands End  vs.  Big 5 Sporting

Lands End

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Lands End exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Lands End and Big 5

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

The idea behind Lands End and Big 5 Sporting 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 Transaction History module to view history of all your transactions and understand their impact on performance.