Correlation Between Warby Parker and Kaixin Auto
Can any of the company-specific risk be diversified away by investing in both Warby Parker and Kaixin Auto 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 Warby Parker and Kaixin Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warby Parker and Kaixin Auto Holdings, you can compare the effects of market volatilities on Warby Parker and Kaixin Auto 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 Warby Parker with a short position of Kaixin Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warby Parker and Kaixin Auto.
Diversification Opportunities for Warby Parker and Kaixin Auto
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Warby and Kaixin is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Warby Parker and Kaixin Auto Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaixin Auto Holdings and Warby Parker 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 Warby Parker are associated (or correlated) with Kaixin Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaixin Auto Holdings has no effect on the direction of Warby Parker i.e., Warby Parker and Kaixin Auto go up and down completely randomly.
Pair Corralation between Warby Parker and Kaixin Auto
Given the investment horizon of 90 days Warby Parker is expected to generate 2.27 times less return on investment than Kaixin Auto. But when comparing it to its historical volatility, Warby Parker is 10.45 times less risky than Kaixin Auto. It trades about 0.28 of its potential returns per unit of risk. Kaixin Auto Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 396.00 in Kaixin Auto Holdings on September 3, 2024 and sell it today you would lose (200.00) from holding Kaixin Auto Holdings or give up 50.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warby Parker vs. Kaixin Auto Holdings
Performance |
| Timeline |
| Warby Parker |
| Kaixin Auto Holdings |
Warby Parker and Kaixin Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warby Parker and Kaixin Auto
The main advantage of trading using opposite Warby Parker and Kaixin Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warby Parker position performs unexpectedly, Kaixin Auto 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 Kaixin Auto will offset losses from the drop in Kaixin Auto's long position.| Warby Parker vs. Alcon AG | Warby Parker vs. The Cooper Companies, | Warby Parker vs. AngioDynamics | Warby Parker vs. AptarGroup |
| Kaixin Auto vs. Vroom Inc | Kaixin Auto vs. Cango Inc | Kaixin Auto vs. Cars Inc | Kaixin Auto vs. KAR Auction 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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