Correlation Between Arhaus and Topbuild Corp

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

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

Diversification Opportunities for Arhaus and Topbuild Corp

0.15

Correlation Coefficient

Arhaus  Topbuild Corp

Average diversification

The 3 months correlation between Arhaus and Topbuild is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Topbuild Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topbuild Corp and Arhaus 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 Arhaus Inc are associated (or correlated) with Topbuild Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topbuild Corp has no effect on the direction of Arhaus i.e., Arhaus and Topbuild Corp go up and down completely randomly.

Pair Corralation between Arhaus and Topbuild Corp

Given the investment horizon of 90 days Arhaus Inc is expected to generate 2.07 times more return on investment than Topbuild Corp. However, Arhaus is 2.07 times more volatile than Topbuild Corp. It trades about -0.05 of its potential returns per unit of risk. Topbuild Corp is currently generating about -0.2 per unit of risk. If you would invest  1,090  in Arhaus Inc on December 4, 2024 and sell it today you would lose (193.00) from holding Arhaus Inc or give up 17.71% of portfolio value over 90 days.

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

Arhaus Inc  vs.  Topbuild Corp

Arhaus Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Topbuild Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Topbuild Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Arhaus and Topbuild Corp

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

The idea behind Arhaus Inc and Topbuild Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.