Correlation Between Big 5 and MarineMax

Can any of the company-specific risk be diversified away by investing in both Big 5 and MarineMax 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 Big 5 and MarineMax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big 5 Sporting and MarineMax, you can compare the effects of market volatilities on Big 5 and MarineMax 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 Big 5 with a short position of MarineMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and MarineMax.

Diversification Opportunities for Big 5 and MarineMax

0.5

Correlation Coefficient

Big 5  MarineMax

Very weak diversification

The 3 months correlation between Big and MarineMax is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax and Big 5 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 Big 5 Sporting are associated (or correlated) with MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of Big 5 i.e., Big 5 and MarineMax go up and down completely randomly.

Pair Corralation between Big 5 and MarineMax

Given the investment horizon of 90 days Big 5 Sporting is expected to under-perform the MarineMax. In addition to that, Big 5 is 1.2 times more volatile than MarineMax. It trades about -0.1 of its total potential returns per unit of risk. MarineMax is currently generating about -0.08 per unit of volatility. If you would invest  3,313  in MarineMax on August 14, 2024 and sell it today you would lose (230.00) from holding MarineMax or give up 6.94% of portfolio value over 90 days.

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

Big 5 Sporting  vs.  MarineMax

Big 5 Sporting

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Big 5 Sporting are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, Big 5 may actually be approaching a critical reversion point that can send shares even higher in December 2024.

MarineMax

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MarineMax are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, MarineMax displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Big 5 and MarineMax

The main advantage of trading using opposite Big 5 and MarineMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 position performs unexpectedly, MarineMax 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 MarineMax will offset losses from the drop in MarineMax's long position.

The idea behind Big 5 Sporting and MarineMax 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.