Correlation Between Best Buy and MarineMax

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Can any of the company-specific risk be diversified away by investing in both Best Buy 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 Best Buy and MarineMax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Best Buy Co and MarineMax, you can compare the effects of market volatilities on Best Buy 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 Best Buy with a short position of MarineMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Best Buy and MarineMax.

Diversification Opportunities for Best Buy and MarineMax

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Best Buy and MarineMax is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Best Buy Co and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax and Best Buy 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 Best Buy Co 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 Best Buy i.e., Best Buy and MarineMax go up and down completely randomly.

Pair Corralation between Best Buy and MarineMax

Considering the 90-day investment horizon Best Buy Co is expected to generate 0.91 times more return on investment than MarineMax. However, Best Buy Co is 1.09 times less risky than MarineMax. It trades about -0.01 of its potential returns per unit of risk. MarineMax is currently generating about -0.05 per unit of risk. If you would invest  10,028  in Best Buy Co on September 5, 2022 and sell it today you would lose (1,368)  from holding Best Buy Co or give up 13.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Best Buy Co  vs.  MarineMax

 Performance (%) 
       Timeline  
Best Buy 
Best Buy Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental drivers, Best Buy showed solid returns over the last few months and may actually be approaching a breakup point.

Best Buy Price Channel

MarineMax 
MarineMax Performance
0 of 100
Over the last 90 days MarineMax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, MarineMax is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MarineMax Price Channel

Best Buy and MarineMax Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Best Buy and MarineMax

The main advantage of trading using opposite Best Buy and MarineMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Best Buy 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.
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The idea behind Best Buy Co 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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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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