Correlation Between WeWork and Allbirds
Can any of the company-specific risk be diversified away by investing in both WeWork and Allbirds 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 WeWork and Allbirds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WeWork Inc and Allbirds, you can compare the effects of market volatilities on WeWork and Allbirds 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 WeWork with a short position of Allbirds. Check out your portfolio center. Please also check ongoing floating volatility patterns of WeWork and Allbirds.
Diversification Opportunities for WeWork and Allbirds
Very weak diversification
The 3 months correlation between WeWork and Allbirds is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding WeWork Inc and Allbirds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allbirds and WeWork 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 WeWork Inc are associated (or correlated) with Allbirds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allbirds has no effect on the direction of WeWork i.e., WeWork and Allbirds go up and down completely randomly.
Pair Corralation between WeWork and Allbirds
Allowing for the 90-day total investment horizon WeWork Inc is expected to generate 1.01 times more return on investment than Allbirds. However, WeWork is 1.01 times more volatile than Allbirds. It trades about 0.19 of its potential returns per unit of risk. Allbirds is currently generating about -0.03 per unit of risk. If you would invest 19.00 in WeWork Inc on August 31, 2024 and sell it today you would earn a total of 7.00 from holding WeWork Inc or generate 36.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.56% |
| Values | Daily Returns |
WeWork Inc vs. Allbirds
Performance |
| Timeline |
| WeWork Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Allbirds |
WeWork and Allbirds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WeWork and Allbirds
The main advantage of trading using opposite WeWork and Allbirds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WeWork position performs unexpectedly, Allbirds 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 Allbirds will offset losses from the drop in Allbirds' long position.The idea behind WeWork Inc and Allbirds 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.| Allbirds vs. Stitch Fix | Allbirds vs. Genesco | Allbirds vs. Shoe Carnival | Allbirds vs. Lulus Fashion Lounge |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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