Correlation Between BM European and Ollies Bargain

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

By analyzing existing cross correlation between BM European Value and Ollies Bargain Outlet, you can compare the effects of market volatilities on BM European and Ollies Bargain 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 BM European with a short position of Ollies Bargain. Check out your portfolio center. Please also check ongoing floating volatility patterns of BM European and Ollies Bargain.

Diversification Opportunities for BM European and Ollies Bargain

0.5

Correlation Coefficient

BM European  Ollies Bargain

Very weak diversification

The 3 months correlation between BMRPF and Ollies is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BM European Value and Ollies Bargain Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ollies Bargain Outlet and BM European 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 BM European Value are associated (or correlated) with Ollies Bargain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ollies Bargain Outlet has no effect on the direction of BM European i.e., BM European and Ollies Bargain go up and down completely randomly.

Pair Corralation between BM European and Ollies Bargain

Assuming the 90 days horizon BM European Value is expected to under-perform the Ollies Bargain. In addition to that, BM European is 1.42 times more volatile than Ollies Bargain Outlet. It trades about -0.09 of its total potential returns per unit of risk. Ollies Bargain Outlet is currently generating about 0.03 per unit of volatility. If you would invest  11,051  in Ollies Bargain Outlet on December 28, 2024 and sell it today you would earn a total of  273.00  from holding Ollies Bargain Outlet or generate 2.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

BM European Value  vs.  Ollies Bargain Outlet

BM European Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days BM European Value has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ollies Bargain Outlet

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ollies Bargain Outlet are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Ollies Bargain is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BM European and Ollies Bargain

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

The idea behind BM European Value and Ollies Bargain Outlet 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.