Correlation Between Freds and Big Lots

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

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

Diversification Opportunities for Freds and Big Lots

0.0

Correlation Coefficient

Freds  Big Lots

Pay attention - limited upside

The 3 months correlation between Freds and Big is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Freds Inc and Big Lots in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Lots and Freds 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 Freds Inc are associated (or correlated) with Big Lots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Lots has no effect on the direction of Freds i.e., Freds and Big Lots go up and down completely randomly.

Pair Corralation between Freds and Big Lots

If you would invest (100.00) in Freds Inc on February 1, 2024 and sell it today you would earn a total of  100.00  from holding Freds Inc 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

Freds Inc  vs.  Big Lots

Freds Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freds Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Freds is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Big Lots

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Freds and Big Lots

The main advantage of trading using opposite Freds and Big Lots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freds position performs unexpectedly, Big Lots 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 Big Lots will offset losses from the drop in Big Lots' long position.

The idea behind Freds Inc and Big Lots 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.