Correlation Between Warby Parker and PDD Holdings
Can any of the company-specific risk be diversified away by investing in both Warby Parker and PDD Holdings 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 PDD Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warby Parker and PDD Holdings, you can compare the effects of market volatilities on Warby Parker and PDD Holdings 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 PDD Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warby Parker and PDD Holdings.
Diversification Opportunities for Warby Parker and PDD Holdings
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Warby and PDD is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Warby Parker and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD 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 PDD Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDD Holdings has no effect on the direction of Warby Parker i.e., Warby Parker and PDD Holdings go up and down completely randomly.
Pair Corralation between Warby Parker and PDD Holdings
Given the investment horizon of 90 days Warby Parker is expected to generate 0.85 times more return on investment than PDD Holdings. However, Warby Parker is 1.18 times less risky than PDD Holdings. It trades about 0.25 of its potential returns per unit of risk. PDD Holdings is currently generating about 0.06 per unit of risk. If you would invest 1,391 in Warby Parker on November 2, 2024 and sell it today you would earn a total of 1,451 from holding Warby Parker or generate 104.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warby Parker vs. PDD Holdings
Performance |
| Timeline |
| Warby Parker |
| PDD Holdings |
Warby Parker and PDD Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warby Parker and PDD Holdings
The main advantage of trading using opposite Warby Parker and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warby Parker position performs unexpectedly, PDD Holdings 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 PDD Holdings will offset losses from the drop in PDD Holdings' long position.| Warby Parker vs. Alcon AG | Warby Parker vs. The Cooper Companies, | Warby Parker vs. AngioDynamics | Warby Parker vs. AptarGroup |
| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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