Correlation Between Build A and Best Buy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Build A and Best Buy 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 Build A and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Build A Bear Workshop and Best Buy Co, you can compare the effects of market volatilities on Build A and Best Buy 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 Build A with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Build A and Best Buy.

Diversification Opportunities for Build A and Best Buy

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Build and Best is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Build-A-Bear Workshop and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Build A 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 Build A Bear Workshop are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Build A i.e., Build A and Best Buy go up and down completely randomly.

Pair Corralation between Build A and Best Buy

Considering the 90-day investment horizon Build A Bear Workshop is expected to generate 2.08 times more return on investment than Best Buy. However, Build A is 2.08 times more volatile than Best Buy Co. It trades about 0.3 of its potential returns per unit of risk. Best Buy Co is currently generating about 0.13 per unit of risk. If you would invest  2,370  in Build A Bear Workshop on December 29, 2023 and sell it today you would earn a total of  617.00  from holding Build A Bear Workshop or generate 26.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Build-A-Bear Workshop  vs.  Best Buy Co

 Performance 
       Timeline  
Build-A-Bear Workshop 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
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 unfluctuating fundamental drivers, Build A showed solid returns over the last few months and may actually be approaching a breakup point.
Best Buy 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Best Buy may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Build A and Best Buy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Build A and Best Buy

The main advantage of trading using opposite Build A and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Build A position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.
The idea behind Build A Bear Workshop and Best Buy Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Equity Valuation
Check real value of public entities based on technical and fundamental data
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Money Managers
Screen money managers from public funds and ETFs managed around the world
Commodity Directory
Find actively traded commodities issued by global exchanges
Transaction History
View history of all your transactions and understand their impact on performance