Correlation Between FLJ and WeWork
Can any of the company-specific risk be diversified away by investing in both FLJ and WeWork 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 FLJ and WeWork into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLJ Group and WeWork Inc, you can compare the effects of market volatilities on FLJ and WeWork 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 FLJ with a short position of WeWork. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLJ and WeWork.
Diversification Opportunities for FLJ and WeWork
Very good diversification
The 3 months correlation between FLJ and WeWork is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding FLJ Group and WeWork Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WeWork Inc and FLJ 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 FLJ Group are associated (or correlated) with WeWork. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WeWork Inc has no effect on the direction of FLJ i.e., FLJ and WeWork go up and down completely randomly.
Pair Corralation between FLJ and WeWork
Considering the 90-day investment horizon FLJ is expected to generate 11.27 times less return on investment than WeWork. In addition to that, FLJ is 2.86 times more volatile than WeWork Inc. It trades about 0.01 of its total potential returns per unit of risk. WeWork Inc is currently generating about 0.23 per unit of volatility. If you would invest 18.00 in WeWork Inc on September 2, 2024 and sell it today you would earn a total of 8.00 from holding WeWork Inc or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 10.38% |
| Values | Daily Returns |
FLJ Group vs. WeWork Inc
Performance |
| Timeline |
| FLJ Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| WeWork Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FLJ and WeWork Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLJ and WeWork
The main advantage of trading using opposite FLJ and WeWork positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLJ position performs unexpectedly, WeWork 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 WeWork will offset losses from the drop in WeWork's long position.The idea behind FLJ Group and WeWork Inc 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 the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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