Correlation Between Polished and Five Below

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

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

Diversification Opportunities for Polished and Five Below

0.04

Correlation Coefficient

Polished  Five Below

Significant diversification

The 3 months correlation between Polished and Five is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Polished and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Polished 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 Polished 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 Polished i.e., Polished and Five Below go up and down completely randomly.

Pair Corralation between Polished and Five Below

If you would invest  8,835  in Five Below on September 29, 2024 and sell it today you would earn a total of  2,082  from holding Five Below or generate 23.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Polished  vs.  Five Below

Polished

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polished has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Polished is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional 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 Polished and Five Below

The main advantage of trading using opposite Polished and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polished 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 Polished 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.