Correlation Between Wayfair and Oriental Culture
Can any of the company-specific risk be diversified away by investing in both Wayfair and Oriental Culture 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 Oriental Culture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayfair and Oriental Culture Holding, you can compare the effects of market volatilities on Wayfair and Oriental Culture 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 Oriental Culture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayfair and Oriental Culture.
Diversification Opportunities for Wayfair and Oriental Culture
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wayfair and Oriental is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and Oriental Culture Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Culture 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 Oriental Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Culture Holding has no effect on the direction of Wayfair i.e., Wayfair and Oriental Culture go up and down completely randomly.
Pair Corralation between Wayfair and Oriental Culture
Taking into account the 90-day investment horizon Wayfair is expected to generate 0.63 times more return on investment than Oriental Culture. However, Wayfair is 1.58 times less risky than Oriental Culture. It trades about 0.1 of its potential returns per unit of risk. Oriental Culture Holding is currently generating about -0.06 per unit of risk. 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 |
Wayfair vs. Oriental Culture Holding
Performance |
| Timeline |
| Wayfair |
| Oriental Culture Holding |
Wayfair and Oriental Culture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayfair and Oriental Culture
The main advantage of trading using opposite Wayfair and Oriental Culture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayfair position performs unexpectedly, Oriental Culture 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 Oriental Culture will offset losses from the drop in Oriental Culture's long position.The idea behind Wayfair and Oriental Culture 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.| Oriental Culture vs. Hour Loop | Oriental Culture vs. Jowell Global | Oriental Culture vs. Qurate Retail Series | Oriental Culture vs. Emerge Commerce |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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