Correlation Between Joann and Five Below

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

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

Diversification Opportunities for Joann and Five Below

-0.38

Correlation Coefficient

Joann  Five Below

Very good diversification

The 3 months correlation between Joann and Five is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Joann Inc and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Joann 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 Joann Inc are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of Joann i.e., Joann and Five Below go up and down completely randomly.

Pair Corralation between Joann and Five Below

If you would invest  10,785  in Five Below on September 29, 2024 and sell it today you would earn a total of  132.00  from holding Five Below or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Joann Inc  vs.  Five Below

Joann Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joann Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Joann is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Five Below

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Five Below are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Five Below exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Joann and Five Below

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

The idea behind Joann Inc and Five Below 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.