Correlation Between Lands End and Build A

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

Diversification Opportunities for Lands End and Build A

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Lands and Build is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lands End 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 Workshop and Lands End 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 Lands End 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 Workshop has no effect on the direction of Lands End i.e., Lands End and Build A go up and down completely randomly.

Pair Corralation between Lands End and Build A

Allowing for the 90-day total investment horizon Lands End is expected to generate 4.58 times less return on investment than Build A. In addition to that, Lands End is 1.45 times more volatile than Build A Bear Workshop. It trades about 0.01 of its total potential returns per unit of risk. Build A Bear Workshop is currently generating about 0.05 per unit of volatility. If you would invest  1,625  in Build A Bear Workshop on December 30, 2023 and sell it today you would earn a total of  1,362  from holding Build A Bear Workshop or generate 83.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lands End  vs.  Build-A-Bear Workshop

 Performance 
       Timeline  
Lands End 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Lands End exhibited solid returns over the last few months and may actually be approaching a breakup point.
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 weak fundamental drivers, Build A showed solid returns over the last few months and may actually be approaching a breakup point.

Lands End and Build A Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lands End and Build A

The main advantage of trading using opposite Lands End and Build A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End 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 Lands End 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.
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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