Correlation Between Tile Shop and Five Below

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

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

Diversification Opportunities for Tile Shop and Five Below

0.75

Correlation Coefficient

Tile Shop  Five Below

Poor diversification

The 3 months correlation between Tile and Five is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Tile Shop Holdings and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Tile Shop 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 Tile Shop Holdings 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 Tile Shop i.e., Tile Shop and Five Below go up and down completely randomly.

Pair Corralation between Tile Shop and Five Below

Given the investment horizon of 90 days Tile Shop Holdings is expected to generate 0.7 times more return on investment than Five Below. However, Tile Shop Holdings is 1.43 times less risky than Five Below. It trades about 0.03 of its potential returns per unit of risk. Five Below is currently generating about -0.03 per unit of risk. If you would invest  498.00  in Tile Shop Holdings on February 8, 2025 and sell it today you would earn a total of  109.00  from holding Tile Shop Holdings or generate 21.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Tile Shop Holdings  vs.  Five Below

Tile Shop Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tile Shop Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Five Below

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Five Below are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Five Below is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tile Shop and Five Below

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

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.