Correlation Between Brilliant Earth and TheRealReal
Can any of the company-specific risk be diversified away by investing in both Brilliant Earth and TheRealReal 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 Brilliant Earth and TheRealReal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brilliant Earth Group and TheRealReal, you can compare the effects of market volatilities on Brilliant Earth and TheRealReal 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 Brilliant Earth with a short position of TheRealReal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Earth and TheRealReal.
Diversification Opportunities for Brilliant Earth and TheRealReal
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brilliant and TheRealReal is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and TheRealReal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TheRealReal and Brilliant Earth 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 Brilliant Earth Group are associated (or correlated) with TheRealReal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TheRealReal has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and TheRealReal go up and down completely randomly.
Pair Corralation between Brilliant Earth and TheRealReal
Given the investment horizon of 90 days Brilliant Earth is expected to generate 18.52 times less return on investment than TheRealReal. But when comparing it to its historical volatility, Brilliant Earth Group is 1.04 times less risky than TheRealReal. It trades about 0.02 of its potential returns per unit of risk. TheRealReal is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 293.00 in TheRealReal on August 24, 2024 and sell it today you would earn a total of 155.00 from holding TheRealReal or generate 52.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Brilliant Earth Group vs. TheRealReal
Performance |
| Timeline |
| Brilliant Earth Group |
| TheRealReal |
Brilliant Earth and TheRealReal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brilliant Earth and TheRealReal
The main advantage of trading using opposite Brilliant Earth and TheRealReal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Earth position performs unexpectedly, TheRealReal 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 TheRealReal will offset losses from the drop in TheRealReal's long position.| Brilliant Earth vs. Capri Holdings | Brilliant Earth vs. Movado Group | Brilliant Earth vs. Tapestry | Brilliant Earth vs. TheRealReal |
| TheRealReal vs. Capri Holdings | TheRealReal vs. Movado Group | TheRealReal vs. Tapestry | TheRealReal vs. Brilliant Earth Group |
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 the Transaction History module to view history of all your transactions and understand their impact on performance.
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