Correlation Between Barnes Noble and Guess

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

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

Diversification Opportunities for Barnes Noble and Guess

-0.52

Correlation Coefficient

Barnes Noble  Guess

Excellent diversification

The 3 months correlation between Barnes and Guess is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Noble Education and Guess Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guess Inc and Barnes Noble 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 Barnes Noble Education are associated (or correlated) with Guess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guess Inc has no effect on the direction of Barnes Noble i.e., Barnes Noble and Guess go up and down completely randomly.

Pair Corralation between Barnes Noble and Guess

Given the investment horizon of 90 days Barnes Noble Education is expected to under-perform the Guess. In addition to that, Barnes Noble is 2.72 times more volatile than Guess Inc. It trades about -0.03 of its total potential returns per unit of risk. Guess Inc is currently generating about 0.07 per unit of volatility. If you would invest  1,722  in Guess Inc on February 9, 2024 and sell it today you would earn a total of  935.00  from holding Guess Inc or generate 54.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

Barnes Noble Education  vs.  Guess Inc

Barnes Noble Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barnes Noble Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Guess Inc

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Barnes Noble and Guess

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

The idea behind Barnes Noble Education and Guess 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.