Correlation Between Pets At and Overstock
Can any of the company-specific risk be diversified away by investing in both Pets At and Overstock 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 Pets At and Overstock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pets at Home and Overstock, you can compare the effects of market volatilities on Pets At and Overstock 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 Pets At with a short position of Overstock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and Overstock.
Diversification Opportunities for Pets At and Overstock
Very weak diversification
The 3 months correlation between Pets and Overstock is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and Overstock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstock and Pets At 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 Pets at Home are associated (or correlated) with Overstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overstock has no effect on the direction of Pets At i.e., Pets At and Overstock go up and down completely randomly.
Pair Corralation between Pets At and Overstock
Assuming the 90 days trading horizon Pets At is expected to generate 29.34 times less return on investment than Overstock. But when comparing it to its historical volatility, Pets at Home is 3.96 times less risky than Overstock. It trades about 0.05 of its potential returns per unit of risk. Overstock is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 479.00 in Overstock on October 27, 2024 and sell it today you would earn a total of 301.00 from holding Overstock or generate 62.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Pets at Home vs. Overstock
Performance |
| Timeline |
| Pets at Home |
| Overstock |
Pets At and Overstock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pets At and Overstock
The main advantage of trading using opposite Pets At and Overstock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pets At position performs unexpectedly, Overstock 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 Overstock will offset losses from the drop in Overstock's long position.| Pets At vs. Samsung Electronics Co | Pets At vs. Samsung Electronics Co | Pets At vs. OTP Bank Nyrt | Pets At vs. Halyk Bank of |
| Overstock vs. Golden Metal Resources | Overstock vs. Atalaya Mining | Overstock vs. Coeur Mining | Overstock vs. Jupiter Fund Management |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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