Correlation Between Stitch Fix and EMBARK EDUCATION
Can any of the company-specific risk be diversified away by investing in both Stitch Fix and EMBARK EDUCATION 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 Stitch Fix and EMBARK EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stitch Fix and EMBARK EDUCATION LTD, you can compare the effects of market volatilities on Stitch Fix and EMBARK EDUCATION 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 Stitch Fix with a short position of EMBARK EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stitch Fix and EMBARK EDUCATION.
Diversification Opportunities for Stitch Fix and EMBARK EDUCATION
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stitch and EMBARK is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stitch Fix and EMBARK EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARK EDUCATION LTD and Stitch Fix 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 Stitch Fix are associated (or correlated) with EMBARK EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARK EDUCATION LTD has no effect on the direction of Stitch Fix i.e., Stitch Fix and EMBARK EDUCATION go up and down completely randomly.
Pair Corralation between Stitch Fix and EMBARK EDUCATION
Assuming the 90 days horizon Stitch Fix is expected to generate 8.84 times more return on investment than EMBARK EDUCATION. However, Stitch Fix is 8.84 times more volatile than EMBARK EDUCATION LTD. It trades about 0.04 of its potential returns per unit of risk. EMBARK EDUCATION LTD is currently generating about 0.12 per unit of risk. If you would invest 369.00 in Stitch Fix on September 4, 2024 and sell it today you would earn a total of 73.00 from holding Stitch Fix or generate 19.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Stitch Fix vs. EMBARK EDUCATION LTD
Performance |
| Timeline |
| Stitch Fix |
| EMBARK EDUCATION LTD |
Stitch Fix and EMBARK EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stitch Fix and EMBARK EDUCATION
The main advantage of trading using opposite Stitch Fix and EMBARK EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stitch Fix position performs unexpectedly, EMBARK EDUCATION 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 EMBARK EDUCATION will offset losses from the drop in EMBARK EDUCATION's long position.| Stitch Fix vs. ALGOMA STEEL GROUP | Stitch Fix vs. Sims Metal Management | Stitch Fix vs. Caltagirone SpA | Stitch Fix vs. GFL ENVIRONM |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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