Correlation Between Genuine Parts and Build-A-Bear Workshop

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

Diversification Opportunities for Genuine Parts and Build-A-Bear Workshop

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Genuine and Build-A-Bear is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts and Build-A-Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build-A-Bear Workshop and Genuine Parts 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 Genuine Parts are associated (or correlated) with Build-A-Bear Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build-A-Bear Workshop has no effect on the direction of Genuine Parts i.e., Genuine Parts and Build-A-Bear Workshop go up and down completely randomly.

Pair Corralation between Genuine Parts and Build-A-Bear Workshop

Considering the 90-day investment horizon Genuine Parts is expected to generate 0.58 times more return on investment than Build-A-Bear Workshop. However, Genuine Parts is 1.71 times less risky than Build-A-Bear Workshop. It trades about -0.03 of its potential returns per unit of risk. Build-A-Bear Workshop is currently generating about -0.22 per unit of risk. If you would invest  13,583  in Genuine Parts on March 31, 2022 and sell it today you would lose (164.00)  from holding Genuine Parts or give up 1.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Genuine Parts  vs.  Build-A-Bear Workshop

 Performance (%) 
      Timeline 
Genuine Parts 
Genuine Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Genuine Parts may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0261
Payout Ratio
0.47
Last Split Factor
3:2
Forward Annual Dividend Rate
3.58
Dividend Date
2022-07-01
Ex Dividend Date
2022-06-02
Last Split Date
1997-04-15

Genuine Price Channel

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 fairly stable fundamental drivers, Build-A-Bear Workshop is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Structure and Payout Changes

Payout Ratio
0.4
Dividend Date
2021-12-27
Ex Dividend Date
2021-12-09

Build-A-Bear Price Channel

Genuine Parts and Build-A-Bear Workshop Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Genuine Parts and Build-A-Bear Workshop

The main advantage of trading using opposite Genuine Parts and Build-A-Bear Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts position performs unexpectedly, Build-A-Bear Workshop 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 Build-A-Bear Workshop will offset losses from the drop in Build-A-Bear Workshop's long position.
The idea behind Genuine Parts and Build-A-Bear Workshop 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 CEO Directory module to screen CEOs from public companies around the world.

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