Correlation Between Lands End and Five Below
Can any of the company-specific risk be diversified away by investing in both Lands End 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 Lands End and Five Below into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lands End and Five Below, you can compare the effects of market volatilities on Lands End 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 Lands End with a short position of Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lands End and Five Below.
Diversification Opportunities for Lands End and Five Below
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lands and Five is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below 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 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 Lands End i.e., Lands End and Five Below go up and down completely randomly.
Pair Corralation between Lands End and Five Below
Allowing for the 90-day total investment horizon Lands End is expected to generate 1.64 times more return on investment than Five Below. However, Lands End is 1.64 times more volatile than Five Below. It trades about 0.18 of its potential returns per unit of risk. Five Below is currently generating about -0.04 per unit of risk. If you would invest 630.00 in Lands End on January 25, 2024 and sell it today you would earn a total of 681.00 from holding Lands End or generate 108.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lands End vs. Five Below
Performance |
| Timeline |
| Lands End |
| Five Below |
Lands End and Five Below Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lands End and Five Below
The main advantage of trading using opposite Lands End and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lands End 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.| Lands End vs. Tillys Inc | Lands End vs. Zumiez Inc | Lands End vs. Citi Trends | Lands End vs. Cato Corporation |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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