Correlation Between Big Lots and Abercrombie Fitch

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

Diversification Opportunities for Big Lots and Abercrombie Fitch

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Big Lots and Abercrombie is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Big Lots and Abercrombie Fitch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abercrombie Fitch and Big Lots 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 Lots are associated (or correlated) with Abercrombie Fitch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abercrombie Fitch has no effect on the direction of Big Lots i.e., Big Lots and Abercrombie Fitch go up and down completely randomly.

Pair Corralation between Big Lots and Abercrombie Fitch

Considering the 90-day investment horizon Big Lots is expected to under-perform the Abercrombie Fitch. In addition to that, Big Lots is 1.64 times more volatile than Abercrombie Fitch. It trades about -0.13 of its total potential returns per unit of risk. Abercrombie Fitch is currently generating about 0.08 per unit of volatility. If you would invest  1,552  in Abercrombie Fitch on July 6, 2022 and sell it today you would earn a total of  63.00  from holding Abercrombie Fitch or generate 4.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Big Lots  vs.  Abercrombie Fitch

 Performance (%) 
       Timeline  
Big Lots 
Big Lots Performance
0 of 100
Over the last 90 days Big Lots has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Big Lots is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Big Lots Price Channel

Abercrombie Fitch 
Abercrombie Performance
0 of 100
Over the last 90 days Abercrombie Fitch has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Abercrombie Fitch is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Abercrombie Price Channel

Big Lots and Abercrombie Fitch Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Big Lots and Abercrombie Fitch

The main advantage of trading using opposite Big Lots and Abercrombie Fitch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Lots position performs unexpectedly, Abercrombie Fitch 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 Abercrombie Fitch will offset losses from the drop in Abercrombie Fitch's long position.
Big Lots vs. Amazon Inc
The idea behind Big Lots and Abercrombie Fitch 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.
Abercrombie Fitch vs. Amazon Inc
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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