Correlation Between Farfetch and Wayfair
Can any of the company-specific risk be diversified away by investing in both Farfetch 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 Farfetch and Wayfair 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 Wayfair, you can compare the effects of market volatilities on Farfetch 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 Farfetch with a short position of Wayfair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farfetch and Wayfair.
Diversification Opportunities for Farfetch and Wayfair
Good diversification
The 3 months correlation between Farfetch and Wayfair is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Farfetch Ltd Class and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair 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 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 Farfetch i.e., Farfetch and Wayfair go up and down completely randomly.
Pair Corralation between Farfetch and Wayfair
If you would invest 4,443 in Wayfair on August 28, 2024 and sell it today you would earn a total of 384.00 from holding Wayfair or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Farfetch Ltd Class vs. Wayfair
Performance |
| Timeline |
| Farfetch Class |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Wayfair |
Farfetch and Wayfair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farfetch and Wayfair
The main advantage of trading using opposite Farfetch and Wayfair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farfetch 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.| Farfetch vs. JD Inc Adr | Farfetch vs. Alibaba Group Holding | Farfetch vs. Sea | Farfetch vs. Vipshop Holdings Limited |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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