Correlation Between Wearable Devices and Peloton Interactive
Can any of the company-specific risk be diversified away by investing in both Wearable Devices and Peloton Interactive 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 Wearable Devices and Peloton Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wearable Devices and Peloton Interactive, you can compare the effects of market volatilities on Wearable Devices and Peloton Interactive 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 Wearable Devices with a short position of Peloton Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wearable Devices and Peloton Interactive.
Diversification Opportunities for Wearable Devices and Peloton Interactive
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wearable and Peloton is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Devices and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive and Wearable Devices 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 Wearable Devices are associated (or correlated) with Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of Wearable Devices i.e., Wearable Devices and Peloton Interactive go up and down completely randomly.
Pair Corralation between Wearable Devices and Peloton Interactive
Given the investment horizon of 90 days Wearable Devices is expected to under-perform the Peloton Interactive. In addition to that, Wearable Devices is 1.74 times more volatile than Peloton Interactive. It trades about -0.01 of its total potential returns per unit of risk. Peloton Interactive is currently generating about 0.28 per unit of volatility. If you would invest 640.00 in Peloton Interactive on August 28, 2024 and sell it today you would earn a total of 318.00 from holding Peloton Interactive or generate 49.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wearable Devices vs. Peloton Interactive
Performance |
| Timeline |
| Wearable Devices |
| Peloton Interactive |
Wearable Devices and Peloton Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wearable Devices and Peloton Interactive
The main advantage of trading using opposite Wearable Devices and Peloton Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wearable Devices position performs unexpectedly, Peloton Interactive 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 Peloton Interactive will offset losses from the drop in Peloton Interactive's long position.| Wearable Devices vs. Koss Corporation | Wearable Devices vs. Sonos Inc | Wearable Devices vs. LG Display Co | Wearable Devices vs. GoPro Inc |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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