Correlation Between Hollywood Bowl and Target

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

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

Diversification Opportunities for Hollywood Bowl and Target

-0.3

Correlation Coefficient

Hollywood Bowl  Target

Very good diversification

The 3 months correlation between Hollywood and Target is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Hollywood Bowl 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 Hollywood Bowl Group are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Hollywood Bowl i.e., Hollywood Bowl and Target go up and down completely randomly.

Pair Corralation between Hollywood Bowl and Target

Assuming the 90 days horizon Hollywood Bowl Group is expected to generate 0.49 times more return on investment than Target. However, Hollywood Bowl Group is 2.02 times less risky than Target. It trades about 0.09 of its potential returns per unit of risk. Target is currently generating about 0.0 per unit of risk. If you would invest  364.00  in Hollywood Bowl Group on September 16, 2024 and sell it today you would earn a total of  34.00  from holding Hollywood Bowl Group or generate 9.34% return on investment over 90 days.

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

Hollywood Bowl Group  vs.  Target

Hollywood Bowl Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hollywood Bowl Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hollywood Bowl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Target is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hollywood Bowl and Target

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

The idea behind Hollywood Bowl Group and Target 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.