Correlation Between Build-A-Bear Workshop and Advance Auto

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

Specify exactly 2 symbols:

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

Diversification Opportunities for Build-A-Bear Workshop and Advance Auto

0.5
  Correlation Coefficient
Build-A-Bear Workshop
Advance Auto Parts

Very weak diversification

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

Pair Corralation between Build-A-Bear Workshop and Advance Auto

Considering the 90-day investment horizon Build-A-Bear Workshop is expected to generate 2.7 times more return on investment than Advance Auto. However, Build-A-Bear Workshop is 2.7 times more volatile than Advance Auto Parts. It trades about 0.08 of its potential returns per unit of risk. Advance Auto Parts is currently generating about 0.06 per unit of risk. If you would invest  398.00  in Build-A-Bear Workshop on October 25, 2021 and sell it today you would earn a total of  1,285  from holding Build-A-Bear Workshop or generate 322.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Build-A-Bear Workshop  vs.  Advance Auto Parts

 Performance (%) 
      Timeline 
Build-A-Bear Workshop 
Build-A-Bear Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Build-A-Bear Workshop are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Build-A-Bear Workshop showed solid returns over the last few months and may actually be approaching a breakup point.

Build-A-Bear Price Channel

Advance Auto Parts 
Advance Performance
0 of 100
Over the last 90 days Advance Auto Parts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Advance Auto is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

Advance Price Channel

Build-A-Bear Workshop and Advance Auto Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Build-A-Bear Workshop and Advance Auto

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

Build-A-Bear Workshop

Pair trading matchups for Build-A-Bear Workshop

The idea behind Build-A-Bear Workshop and Advance Auto Parts 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.

Advance Auto Parts

Pair trading matchups for Advance Auto

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go