Correlation Between Farfetch and Overstockcom
Can any of the company-specific risk be diversified away by investing in both Farfetch and Overstockcom 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 Farfetch and Overstockcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farfetch Ltd Class and Overstockcom, you can compare the effects of market volatilities on Farfetch and Overstockcom 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 Farfetch with a short position of Overstockcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farfetch and Overstockcom.
Diversification Opportunities for Farfetch and Overstockcom
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Farfetch and Overstockcom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Farfetch Ltd Class and Overstockcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstockcom and Farfetch 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 Farfetch Ltd Class are associated (or correlated) with Overstockcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overstockcom has no effect on the direction of Farfetch i.e., Farfetch and Overstockcom go up and down completely randomly.
Pair Corralation between Farfetch and Overstockcom
If you would invest 3,092 in Overstockcom on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Overstockcom or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farfetch Ltd Class vs. Overstockcom
Performance |
| Timeline |
| Farfetch Class |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Overstockcom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Farfetch and Overstockcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farfetch and Overstockcom
The main advantage of trading using opposite Farfetch and Overstockcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farfetch position performs unexpectedly, Overstockcom 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 Overstockcom will offset losses from the drop in Overstockcom's long position.| Farfetch vs. JD Inc Adr | Farfetch vs. Alibaba Group Holding | Farfetch vs. Sea | Farfetch vs. Vipshop Holdings Limited |
| Overstockcom vs. Etsy Inc | Overstockcom vs. Chewy Inc | Overstockcom vs. PDD Holdings | Overstockcom vs. Sea |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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