Correlation Between Acorn International and Five Below

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

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

Diversification Opportunities for Acorn International and Five Below

0.0

Correlation Coefficient

Acorn International  Five Below

Pay attention - limited upside

The 3 months correlation between Acorn and Five is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Acorn International and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Acorn International 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 Acorn International 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 Acorn International i.e., Acorn International and Five Below go up and down completely randomly.

Pair Corralation between Acorn International and Five Below

If you would invest (100.00) in Acorn International on January 20, 2024 and sell it today you would earn a total of  100.00  from holding Acorn International or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Acorn International  vs.  Five Below

Acorn International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorn International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Acorn International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Five Below

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Acorn International and Five Below

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

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.