Correlation Between Freds and Ollies Bargain

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

By analyzing existing cross correlation between Freds Inc and Ollies Bargain Outlet, you can compare the effects of market volatilities on Freds and Ollies Bargain 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 Ollies Bargain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freds and Ollies Bargain.

Diversification Opportunities for Freds and Ollies Bargain

0.0

Correlation Coefficient

Freds  Ollies Bargain

Pay attention - limited upside

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

Pair Corralation between Freds and Ollies Bargain

If you would invest (100.00) in Freds Inc on February 2, 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.  Ollies Bargain Outlet

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ollies Bargain Outlet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ollies Bargain Outlet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Ollies Bargain is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Freds and Ollies Bargain

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

The idea behind Freds Inc and Ollies Bargain Outlet 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.