Correlation Between Kidpik Corp and Wayfair
Can any of the company-specific risk be diversified away by investing in both Kidpik Corp 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 Kidpik Corp and Wayfair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kidpik Corp and Wayfair, you can compare the effects of market volatilities on Kidpik Corp 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 Kidpik Corp with a short position of Wayfair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kidpik Corp and Wayfair.
Diversification Opportunities for Kidpik Corp and Wayfair
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kidpik and Wayfair is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kidpik Corp and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and Kidpik Corp 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 Kidpik Corp 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 Kidpik Corp i.e., Kidpik Corp and Wayfair go up and down completely randomly.
Pair Corralation between Kidpik Corp and Wayfair
Considering the 90-day investment horizon Kidpik Corp is expected to generate 48.31 times less return on investment than Wayfair. In addition to that, Kidpik Corp is 1.5 times more volatile than Wayfair. It trades about 0.0 of its total potential returns per unit of risk. Wayfair is currently generating about 0.1 per unit of volatility. If you would invest 4,283 in Wayfair on September 1, 2024 and sell it today you would earn a total of 341.00 from holding Wayfair or generate 7.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kidpik Corp vs. Wayfair
Performance |
| Timeline |
| Kidpik Corp |
| Wayfair |
Kidpik Corp and Wayfair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kidpik Corp and Wayfair
The main advantage of trading using opposite Kidpik Corp and Wayfair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kidpik Corp 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.| Kidpik Corp vs. Qurate Retail Series | Kidpik Corp vs. Natural Health Trend | Kidpik Corp vs. Liquidity Services | Kidpik Corp vs. Qurate Retail |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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