Correlation Between Xcel Brands and Warby Parker
Can any of the company-specific risk be diversified away by investing in both Xcel Brands and Warby Parker 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 Xcel Brands and Warby Parker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xcel Brands and Warby Parker, you can compare the effects of market volatilities on Xcel Brands and Warby Parker 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 Xcel Brands with a short position of Warby Parker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xcel Brands and Warby Parker.
Diversification Opportunities for Xcel Brands and Warby Parker
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xcel and Warby is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Brands and Warby Parker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warby Parker and Xcel Brands 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 Xcel Brands are associated (or correlated) with Warby Parker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warby Parker has no effect on the direction of Xcel Brands i.e., Xcel Brands and Warby Parker go up and down completely randomly.
Pair Corralation between Xcel Brands and Warby Parker
Given the investment horizon of 90 days Xcel Brands is expected to under-perform the Warby Parker. In addition to that, Xcel Brands is 2.65 times more volatile than Warby Parker. It trades about -0.05 of its total potential returns per unit of risk. Warby Parker is currently generating about 0.24 per unit of volatility. If you would invest 1,558 in Warby Parker on October 31, 2024 and sell it today you would earn a total of 1,133 from holding Warby Parker or generate 72.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xcel Brands vs. Warby Parker
Performance |
| Timeline |
| Xcel Brands |
| Warby Parker |
Xcel Brands and Warby Parker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xcel Brands and Warby Parker
The main advantage of trading using opposite Xcel Brands and Warby Parker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xcel Brands position performs unexpectedly, Warby Parker 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 Warby Parker will offset losses from the drop in Warby Parker's long position.| Xcel Brands vs. H M Hennes | Xcel Brands vs. Under Armour C | Xcel Brands vs. H M Hennes | Xcel Brands vs. Oxford Industries |
| Warby Parker vs. Alcon AG | Warby Parker vs. The Cooper Companies, | Warby Parker vs. AngioDynamics | Warby Parker vs. AptarGroup |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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