Correlation Between Trade Desk and Wix
Can any of the company-specific risk be diversified away by investing in both Trade Desk and Wix 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 Trade Desk and Wix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Trade Desk and Wix, you can compare the effects of market volatilities on Trade Desk and Wix 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 Trade Desk with a short position of Wix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Desk and Wix.
Diversification Opportunities for Trade Desk and Wix
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Trade and Wix is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk and Wix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wix and Trade Desk 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 The Trade Desk are associated (or correlated) with Wix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wix has no effect on the direction of Trade Desk i.e., Trade Desk and Wix go up and down completely randomly.
Pair Corralation between Trade Desk and Wix
Assuming the 90 days trading horizon The Trade Desk is expected to under-perform the Wix. But the stock apears to be less risky and, when comparing its historical volatility, The Trade Desk is 1.6 times less risky than Wix. The stock trades about -0.23 of its potential returns per unit of risk. The Wix is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,215 in Wix on October 14, 2024 and sell it today you would earn a total of 225.00 from holding Wix or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Trade Desk vs. Wix
Performance |
| Timeline |
| Trade Desk |
| Wix |
Trade Desk and Wix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trade Desk and Wix
The main advantage of trading using opposite Trade Desk and Wix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk position performs unexpectedly, Wix 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 Wix will offset losses from the drop in Wix's long position.| Trade Desk vs. Sumitomo Mitsui Financial | Trade Desk vs. ICICI Bank Limited | Trade Desk vs. Capital One Financial | Trade Desk vs. Broadridge Financial Solutions, |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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