Correlation Between Wayfair and AKA Brands
Can any of the company-specific risk be diversified away by investing in both Wayfair and AKA Brands 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 Wayfair and AKA Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayfair and AKA Brands Holding, you can compare the effects of market volatilities on Wayfair and AKA Brands 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 Wayfair with a short position of AKA Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayfair and AKA Brands.
Diversification Opportunities for Wayfair and AKA Brands
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wayfair and AKA is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and AKA Brands Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKA Brands Holding and Wayfair 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 Wayfair are associated (or correlated) with AKA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKA Brands Holding has no effect on the direction of Wayfair i.e., Wayfair and AKA Brands go up and down completely randomly.
Pair Corralation between Wayfair and AKA Brands
Taking into account the 90-day investment horizon Wayfair is expected to generate 1.89 times less return on investment than AKA Brands. But when comparing it to its historical volatility, Wayfair is 1.54 times less risky than AKA Brands. It trades about 0.03 of its potential returns per unit of risk. AKA Brands Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,196 in AKA Brands Holding on August 25, 2024 and sell it today you would lose (78.00) from holding AKA Brands Holding or give up 3.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wayfair vs. AKA Brands Holding
Performance |
| Timeline |
| Wayfair |
| AKA Brands Holding |
Wayfair and AKA Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayfair and AKA Brands
The main advantage of trading using opposite Wayfair and AKA Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayfair position performs unexpectedly, AKA Brands 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 AKA Brands will offset losses from the drop in AKA Brands' long position.The idea behind Wayfair and AKA Brands Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AKA Brands vs. Brilliant Earth Group | AKA Brands vs. Lulus Fashion Lounge | AKA Brands vs. Torrid Holdings | AKA Brands vs. Aveanna Healthcare Holdings |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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