Correlation Between Build-A-Bear Workshop and Best Buy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Build-A-Bear Workshop and Best Buy 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 Best Buy 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 Best Buy Company, you can compare the effects of market volatilities on Build-A-Bear Workshop and Best Buy 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 Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Build-A-Bear Workshop and Best Buy.

Diversification Opportunities for Build-A-Bear Workshop and Best Buy

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Build-A-Bear and Best Buy is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Build-A-Bear Workshop and Best Buy Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy 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 Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Build-A-Bear Workshop i.e., Build-A-Bear Workshop and Best Buy go up and down completely randomly.

Pair Corralation between Build-A-Bear Workshop and Best Buy

Considering the 90-day investment horizon Build-A-Bear Workshop is expected to under-perform the Best Buy. In addition to that, Build-A-Bear Workshop is 1.6 times more volatile than Best Buy Company. It trades about -0.15 of its total potential returns per unit of risk. Best Buy Company is currently generating about -0.15 per unit of volatility. If you would invest  7,069  in Best Buy Company on July 2, 2022 and sell it today you would lose (561.00)  from holding Best Buy Company or give up 7.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Build-A-Bear Workshop  vs.  Best Buy Company

 Performance (%) 
       Timeline  
Build-A-Bear Workshop 
Build-A-Bear Performance
0 of 100
Over the last 90 days Build-A-Bear Workshop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in October 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Build-A-Bear Price Channel

Best Buy 
Best Buy Performance
0 of 100
Over the last 90 days Best Buy Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Best Buy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Best Buy Price Channel

Build-A-Bear Workshop and Best Buy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Build-A-Bear Workshop and Best Buy

The main advantage of trading using opposite Build-A-Bear Workshop and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Build-A-Bear Workshop position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.
Build-A-Bear Workshop vs. Best Buy Company
The idea behind Build-A-Bear Workshop and Best Buy Company 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go