Correlation Between Wayfair and WISH Old
Can any of the company-specific risk be diversified away by investing in both Wayfair and WISH Old 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 WISH Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wayfair and WISH Old, you can compare the effects of market volatilities on Wayfair and WISH Old 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 WISH Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayfair and WISH Old.
Diversification Opportunities for Wayfair and WISH Old
Good diversification
The 3 months correlation between Wayfair and WISH is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and WISH Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WISH Old 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 WISH Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WISH Old has no effect on the direction of Wayfair i.e., Wayfair and WISH Old go up and down completely randomly.
Pair Corralation between Wayfair and WISH Old
Taking into account the 90-day investment horizon Wayfair is expected to under-perform the WISH Old. In addition to that, Wayfair is 2.64 times more volatile than WISH Old. It trades about -0.03 of its total potential returns per unit of risk. WISH Old is currently generating about 0.15 per unit of volatility. If you would invest 546.00 in WISH Old on August 29, 2024 and sell it today you would earn a total of 29.00 from holding WISH Old or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 19.2% |
| Values | Daily Returns |
Wayfair vs. WISH Old
Performance |
| Timeline |
| Wayfair |
| WISH Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Wayfair and WISH Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wayfair and WISH Old
The main advantage of trading using opposite Wayfair and WISH Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wayfair position performs unexpectedly, WISH Old 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 WISH Old will offset losses from the drop in WISH Old's long position.The idea behind Wayfair and WISH Old 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.| WISH Old vs. Global E Online | WISH Old vs. PDD Holdings | WISH Old vs. Sea | WISH Old vs. Vipshop Holdings Limited |
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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