Correlation Between Compass and Warby Parker
Can any of the company-specific risk be diversified away by investing in both Compass and Warby Parker 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 Compass and Warby Parker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass and Warby Parker, you can compare the effects of market volatilities on Compass and Warby Parker 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 Compass with a short position of Warby Parker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass and Warby Parker.
Diversification Opportunities for Compass and Warby Parker
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compass and Warby is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Compass and Warby Parker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warby Parker and Compass 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 Compass are associated (or correlated) with Warby Parker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warby Parker has no effect on the direction of Compass i.e., Compass and Warby Parker go up and down completely randomly.
Pair Corralation between Compass and Warby Parker
Given the investment horizon of 90 days Compass is expected to generate 1.23 times more return on investment than Warby Parker. However, Compass is 1.23 times more volatile than Warby Parker. It trades about 0.15 of its potential returns per unit of risk. Warby Parker is currently generating about 0.1 per unit of risk. If you would invest 378.00 in Compass on August 28, 2024 and sell it today you would earn a total of 329.00 from holding Compass or generate 87.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass vs. Warby Parker
Performance |
| Timeline |
| Compass |
| Warby Parker |
Compass and Warby Parker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass and Warby Parker
The main advantage of trading using opposite Compass and Warby Parker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass position performs unexpectedly, Warby Parker 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 Warby Parker will offset losses from the drop in Warby Parker's long position.The idea behind Compass and Warby Parker 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.| Warby Parker vs. Oriental Culture Holding | Warby Parker vs. Hour Loop | Warby Parker vs. Qurate Retail Series | Warby Parker vs. Emerge Commerce |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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