Correlation Between Five Below and Interface
Can any of the company-specific risk be diversified away by investing in both Five Below 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 Five Below and Interface into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Below and Interface, you can compare the effects of market volatilities on Five Below 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 Five Below with a short position of Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Below and Interface.
Diversification Opportunities for Five Below and Interface
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Five and Interface is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Five Below and Interface in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interface and Five Below 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 Five Below 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 Five Below i.e., Five Below and Interface go up and down completely randomly.
Pair Corralation between Five Below and Interface
Given the investment horizon of 90 days Five Below is expected to generate 2.04 times more return on investment than Interface. However, Five Below is 2.04 times more volatile than Interface. It trades about 0.29 of its potential returns per unit of risk. Interface is currently generating about 0.12 per unit of risk. If you would invest 7,539 in Five Below on April 25, 2025 and sell it today you would earn a total of 6,398 from holding Five Below or generate 84.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Five Below vs. Interface
Performance |
Timeline |
Five Below |
Interface |
Five Below and Interface Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Five Below and Interface
The main advantage of trading using opposite Five Below and Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Below 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.Five Below vs. OReilly Automotive | Five Below vs. AutoZone | Five Below vs. Genuine Parts Co | Five Below vs. Williams Sonoma |
Interface vs. Gibraltar Industries | Interface vs. Janus International Group | Interface vs. Quanex Building Products | Interface vs. Jeld Wen Holding |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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