Correlation Between BBB Foods and Arhaus

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

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

Diversification Opportunities for BBB Foods and Arhaus

0.41

Correlation Coefficient

BBB Foods  Arhaus

Very weak diversification

The 3 months correlation between BBB and Arhaus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and BBB Foods 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 BBB Foods are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of BBB Foods i.e., BBB Foods and Arhaus go up and down completely randomly.

Pair Corralation between BBB Foods and Arhaus

Given the investment horizon of 90 days BBB Foods is expected to under-perform the Arhaus. But the stock apears to be less risky and, when comparing its historical volatility, BBB Foods is 1.91 times less risky than Arhaus. The stock trades about -0.09 of its potential returns per unit of risk. The Arhaus Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  939.00  in Arhaus Inc on December 18, 2024 and sell it today you would lose (8.00) from holding Arhaus Inc or give up 0.85% of portfolio value over 90 days.

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

BBB Foods  vs.  Arhaus Inc

BBB Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Arhaus Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Arhaus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BBB Foods and Arhaus

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

The idea behind BBB Foods and Arhaus Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.