Correlation Between 1StdibsCom and Big 5

Can any of the company-specific risk be diversified away by investing in both 1StdibsCom and Big 5 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 1StdibsCom and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1StdibsCom and Big 5 Sporting, you can compare the effects of market volatilities on 1StdibsCom and Big 5 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 1StdibsCom with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1StdibsCom and Big 5.

Diversification Opportunities for 1StdibsCom and Big 5

0.76

Correlation Coefficient

1StdibsCom  Big 5

Poor diversification

The 3 months correlation between 1StdibsCom and Big is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and 1StdibsCom 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 1StdibsCom are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of 1StdibsCom i.e., 1StdibsCom and Big 5 go up and down completely randomly.

Pair Corralation between 1StdibsCom and Big 5

Given the investment horizon of 90 days 1StdibsCom is expected to under-perform the Big 5. But the stock apears to be less risky and, when comparing its historical volatility, 1StdibsCom is 3.05 times less risky than Big 5. The stock trades about -0.02 of its potential returns per unit of risk. The Big 5 Sporting is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  175.00  in Big 5 Sporting on September 26, 2024 and sell it today you would lose (6.00) from holding Big 5 Sporting or give up 3.43% of portfolio value over 90 days.

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

1StdibsCom  vs.  Big 5 Sporting

1StdibsCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1StdibsCom 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 fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Big 5 Sporting

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with 1StdibsCom and Big 5

The main advantage of trading using opposite 1StdibsCom and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.

The idea behind 1StdibsCom and Big 5 Sporting 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..