Correlation Between Build A and Interface

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

By analyzing existing cross correlation between Build A Bear Workshop and Interface, you can compare the effects of market volatilities on Build A and Interface 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 Build A with a short position of Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Build A and Interface.

Diversification Opportunities for Build A and Interface

0.77

Correlation Coefficient

Build A  Interface

Poor diversification

The 3 months correlation between Build and Interface is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Build A Bear Workshop and Interface in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interface and Build A 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 Build A Bear Workshop are associated (or correlated) with Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interface has no effect on the direction of Build A i.e., Build A and Interface go up and down completely randomly.

Pair Corralation between Build A and Interface

Considering the 90-day investment horizon Build A Bear Workshop is expected to generate 2.13 times more return on investment than Interface. However, Build A is 2.13 times more volatile than Interface. It trades about 0.19 of its potential returns per unit of risk. Interface is currently generating about 0.12 per unit of risk. If you would invest  3,463  in Build A Bear Workshop on April 22, 2025 and sell it today you would earn a total of  1,803  from holding Build A Bear Workshop or generate 52.06% return on investment over 90 days.

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

Build A Bear Workshop  vs.  Interface

Build A Bear

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Build A Bear Workshop are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental drivers, Build A showed solid returns over the last few months and may actually be approaching a breakup point.

Interface

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Interface are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Interface exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Build A and Interface

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

The idea behind Build A Bear Workshop and Interface 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.