Correlation Between Pet Acquisition and Build A

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

By analyzing existing cross correlation between Pet Acquisition LLC and Build A Bear Workshop, you can compare the effects of market volatilities on Pet Acquisition and Build A 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 Pet Acquisition with a short position of Build A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pet Acquisition and Build A.

Diversification Opportunities for Pet Acquisition and Build A

-0.84

Correlation Coefficient

Pet Acquisition  Build A

Pay attention - limited upside

The 3 months correlation between Pet and Build is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pet Acquisition LLC and Build A Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build A Bear and Pet Acquisition 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 Pet Acquisition LLC are associated (or correlated) with Build A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build A Bear has no effect on the direction of Pet Acquisition i.e., Pet Acquisition and Build A go up and down completely randomly.

Pair Corralation between Pet Acquisition and Build A

Given the investment horizon of 90 days Pet Acquisition LLC is expected to under-perform the Build A. In addition to that, Pet Acquisition is 1.4 times more volatile than Build A Bear Workshop. It trades about -0.09 of its total potential returns per unit of risk. Build A Bear Workshop is currently generating about 0.06 per unit of volatility. If you would invest  1,541  in Build A Bear Workshop on February 13, 2024 and sell it today you would earn a total of  1,365  from holding Build A Bear Workshop or generate 88.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.78%
Values	Daily Returns

Pet Acquisition LLC  vs.  Build A Bear Workshop

Pet Acquisition LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pet Acquisition LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Build A Bear

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Build A Bear Workshop are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Build A showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pet Acquisition and Build A

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

The idea behind Pet Acquisition LLC and Build A Bear Workshop 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.