Correlation Between Wayfair and Secoo Holding
Can any of the company-specific risk be diversified away by investing in both Wayfair and Secoo Holding 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 Secoo Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayfair and Secoo Holding, you can compare the effects of market volatilities on Wayfair and Secoo Holding 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 Secoo Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayfair and Secoo Holding.
Diversification Opportunities for Wayfair and Secoo Holding
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wayfair and Secoo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and Secoo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secoo 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 Secoo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secoo Holding has no effect on the direction of Wayfair i.e., Wayfair and Secoo Holding go up and down completely randomly.
Pair Corralation between Wayfair and Secoo Holding
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 Together |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Wayfair vs. Secoo Holding
Performance |
| Timeline |
| Wayfair |
| Secoo Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Wayfair and Secoo Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayfair and Secoo Holding
The main advantage of trading using opposite Wayfair and Secoo Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayfair position performs unexpectedly, Secoo Holding 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 Secoo Holding will offset losses from the drop in Secoo Holding's long position.The idea behind Wayfair and Secoo 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.| Secoo Holding vs. Kidpik Corp | Secoo Holding vs. Qurate Retail Series | Secoo Holding vs. Natural Health Trend | Secoo Holding 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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