Correlation Between Big 5 and MarineMax

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

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

Diversification Opportunities for Big 5 and MarineMax

0.65

Correlation Coefficient

Big 5  MarineMax

Poor diversification

The 3 months correlation between Big and MarineMax is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax and Big 5 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 Big 5 Sporting are associated (or correlated) with MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of Big 5 i.e., Big 5 and MarineMax go up and down completely randomly.

Pair Corralation between Big 5 and MarineMax

Given the investment horizon of 90 days Big 5 Sporting is expected to under-perform the MarineMax. But the stock apears to be less risky and, when comparing its historical volatility, Big 5 Sporting is 1.14 times less risky than MarineMax. The stock trades about -0.3 of its potential returns per unit of risk. The MarineMax is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,729  in MarineMax on December 29, 2024 and sell it today you would lose (399.00) from holding MarineMax or give up 14.62% of portfolio value over 90 days.

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

Big 5 Sporting  vs.  MarineMax

Big 5 Sporting

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

MarineMax

Risk-Adjusted Performance

Very Weak

Over the last 90 days MarineMax 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Big 5 and MarineMax

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

The idea behind Big 5 Sporting and MarineMax 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..