Correlation Between PARTS ID and 4 Less

Can any of the company-specific risk be diversified away by investing in both PARTS ID and 4 Less 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 PARTS ID and 4 Less into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PARTS ID and 4 Less Group, you can compare the effects of market volatilities on PARTS ID and 4 Less 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 PARTS ID with a short position of 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARTS ID and 4 Less.

Diversification Opportunities for PARTS ID and 4 Less

-0.24

Correlation Coefficient

PARTS ID  4 Less

Very good diversification

The 3 months correlation between PARTS and FLES is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PARTS ID and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group and PARTS ID 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 PARTS ID are associated (or correlated) with 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of PARTS ID i.e., PARTS ID and 4 Less go up and down completely randomly.

Pair Corralation between PARTS ID and 4 Less

If you would invest  0.04  in 4 Less Group on October 8, 2024 and sell it today you would lose (0.02) from holding 4 Less Group or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

PARTS ID  vs.  4 Less Group

PARTS ID

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PARTS ID has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, PARTS ID is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

4 Less Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 4 Less Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, 4 Less unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PARTS ID and 4 Less

The main advantage of trading using opposite PARTS ID and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARTS ID position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.

The idea behind PARTS ID and 4 Less Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.