Correlation Between Wayfair and Boohoo PLC
Can any of the company-specific risk be diversified away by investing in both Wayfair and Boohoo PLC 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 Boohoo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayfair and BoohooCom PLC ADR, you can compare the effects of market volatilities on Wayfair and Boohoo PLC 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 Boohoo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayfair and Boohoo PLC.
Diversification Opportunities for Wayfair and Boohoo PLC
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wayfair and Boohoo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and BoohooCom PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BoohooCom PLC ADR 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 Boohoo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BoohooCom PLC ADR has no effect on the direction of Wayfair i.e., Wayfair and Boohoo PLC go up and down completely randomly.
Pair Corralation between Wayfair and Boohoo PLC
Taking into account the 90-day investment horizon Wayfair is expected to generate 1.99 times less return on investment than Boohoo PLC. In addition to that, Wayfair is 2.61 times more volatile than BoohooCom PLC ADR. It trades about 0.04 of its total potential returns per unit of risk. BoohooCom PLC ADR is currently generating about 0.21 per unit of volatility. If you would invest 712.00 in BoohooCom PLC ADR on August 29, 2024 and sell it today you would earn a total of 56.00 from holding BoohooCom PLC ADR or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wayfair vs. BoohooCom PLC ADR
Performance |
| Timeline |
| Wayfair |
| BoohooCom PLC ADR |
Wayfair and Boohoo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayfair and Boohoo PLC
The main advantage of trading using opposite Wayfair and Boohoo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayfair position performs unexpectedly, Boohoo PLC 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 Boohoo PLC will offset losses from the drop in Boohoo PLC's long position.The idea behind Wayfair and BoohooCom PLC ADR 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.| Boohoo PLC vs. 1StdibsCom | Boohoo PLC vs. Natural Health Trend | Boohoo PLC vs. Hour Loop | Boohoo PLC vs. Liquidity Services |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |