Correlation Between ABC MartInc and Buckle

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

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

Diversification Opportunities for ABC MartInc and Buckle

0.0

Correlation Coefficient

ABC MartInc  Buckle

Pay attention - limited upside

The 3 months correlation between ABC and Buckle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ABC MartInc and Buckle Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buckle Inc and ABC MartInc 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 ABC MartInc are associated (or correlated) with Buckle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buckle Inc has no effect on the direction of ABC MartInc i.e., ABC MartInc and Buckle go up and down completely randomly.

Pair Corralation between ABC MartInc and Buckle

If you would invest  3,630  in Buckle Inc on September 26, 2024 and sell it today you would earn a total of  1,496  from holding Buckle Inc or generate 41.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.8%
Values	Daily Returns

ABC MartInc  vs.  Buckle Inc

ABC MartInc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Buckle Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Buckle Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward-looking signals, Buckle exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABC MartInc and Buckle

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

The idea behind ABC MartInc and Buckle Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.