Correlation Between 1StdibsCom and Wayfair
Can any of the company-specific risk be diversified away by investing in both 1StdibsCom and Wayfair 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 1StdibsCom and Wayfair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1StdibsCom and Wayfair, you can compare the effects of market volatilities on 1StdibsCom and Wayfair 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 1StdibsCom with a short position of Wayfair. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1StdibsCom and Wayfair.
Diversification Opportunities for 1StdibsCom and Wayfair
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 1StdibsCom and Wayfair is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and 1StdibsCom 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 1StdibsCom are associated (or correlated) with Wayfair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayfair has no effect on the direction of 1StdibsCom i.e., 1StdibsCom and Wayfair go up and down completely randomly.
Pair Corralation between 1StdibsCom and Wayfair
Given the investment horizon of 90 days 1StdibsCom is expected to under-perform the Wayfair. But the stock apears to be less risky and, when comparing its historical volatility, 1StdibsCom is 1.22 times less risky than Wayfair. The stock trades about -0.03 of its potential returns per unit of risk. The Wayfair is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,026 in Wayfair on September 19, 2024 and sell it today you would earn a total of 1,016 from holding Wayfair or generate 25.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
1StdibsCom vs. Wayfair
Performance |
| Timeline |
| 1StdibsCom |
| Wayfair |
1StdibsCom and Wayfair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1StdibsCom and Wayfair
The main advantage of trading using opposite 1StdibsCom and Wayfair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom position performs unexpectedly, Wayfair 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 Wayfair will offset losses from the drop in Wayfair's long position.| 1StdibsCom vs. Twilio Inc | 1StdibsCom vs. Getty Images Holdings | 1StdibsCom vs. Baidu Inc | 1StdibsCom vs. Snap Inc |
| Wayfair vs. Floor Decor Holdings | Wayfair vs. Live Ventures | Wayfair vs. Home Depot | Wayfair vs. Lowes Companies |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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