Correlation Between Ollies Bargain and BM European

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

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

Diversification Opportunities for Ollies Bargain and BM European

0.5

Correlation Coefficient

Ollies Bargain  BM European

Very weak diversification

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

Pair Corralation between Ollies Bargain and BM European

Given the investment horizon of 90 days Ollies Bargain Outlet is expected to generate 0.7 times more return on investment than BM European. However, Ollies Bargain Outlet is 1.42 times less risky than BM European. It trades about 0.03 of its potential returns per unit of risk. BM European Value is currently generating about -0.09 per unit of risk. 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

Ollies Bargain Outlet  vs.  BM European Value

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.

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.

Pair Trading with Ollies Bargain and BM European

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

The idea behind Ollies Bargain Outlet and BM European Value 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.