Correlation Between Barnes Noble and High Tide

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

By analyzing existing cross correlation between Barnes Noble Education and High Tide, you can compare the effects of market volatilities on Barnes Noble and High Tide 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 Barnes Noble with a short position of High Tide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes Noble and High Tide.

Diversification Opportunities for Barnes Noble and High Tide

0.29

Correlation Coefficient

Barnes Noble  High Tide

Modest diversification

The 3 months correlation between Barnes and High is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Noble Education and High Tide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tide and Barnes Noble 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 Barnes Noble Education are associated (or correlated) with High Tide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tide has no effect on the direction of Barnes Noble i.e., Barnes Noble and High Tide go up and down completely randomly.

Pair Corralation between Barnes Noble and High Tide

Given the investment horizon of 90 days Barnes Noble Education is expected to generate 1.5 times more return on investment than High Tide. However, Barnes Noble is 1.5 times more volatile than High Tide. It trades about -0.04 of its potential returns per unit of risk. High Tide is currently generating about -0.18 per unit of risk. If you would invest  1,100  in Barnes Noble Education on December 4, 2024 and sell it today you would lose (190.00) from holding Barnes Noble Education or give up 17.27% of portfolio value over 90 days.

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

Barnes Noble Education  vs.  High Tide

Barnes Noble Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barnes Noble Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental 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.

High Tide

Risk-Adjusted Performance

Very Weak

Over the last 90 days High Tide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Barnes Noble and High Tide

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

The idea behind Barnes Noble Education and High Tide 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.