Correlation Between MercadoLibre and Overstockcom
Can any of the company-specific risk be diversified away by investing in both MercadoLibre 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 MercadoLibre and Overstockcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MercadoLibre and Overstockcom, you can compare the effects of market volatilities on MercadoLibre 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 MercadoLibre with a short position of Overstockcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of MercadoLibre and Overstockcom.
Diversification Opportunities for MercadoLibre and Overstockcom
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MercadoLibre and Overstockcom is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MercadoLibre and Overstockcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstockcom and MercadoLibre 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 MercadoLibre 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 MercadoLibre i.e., MercadoLibre and Overstockcom go up and down completely randomly.
Pair Corralation between MercadoLibre 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 Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
MercadoLibre vs. Overstockcom
Performance |
| Timeline |
| MercadoLibre |
| Overstockcom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MercadoLibre and Overstockcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MercadoLibre and Overstockcom
The main advantage of trading using opposite MercadoLibre and Overstockcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MercadoLibre 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.| MercadoLibre vs. PDD Holdings | MercadoLibre vs. JD Inc Adr | MercadoLibre vs. Alibaba Group Holding | MercadoLibre vs. Global E Online |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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