Correlation Between Allegroeu and Wayfair

Can any of the company-specific risk be diversified away by investing in both Allegroeu and Wayfair 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 Allegroeu and Wayfair into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allegroeu SA and Wayfair, you can compare the effects of market volatilities on Allegroeu and Wayfair 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 Allegroeu with a short position of Wayfair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegroeu and Wayfair.

Diversification Opportunities for Allegroeu and Wayfair

0.0

Correlation Coefficient

Allegroeu  Wayfair

Pay attention - limited upside

The 3 months correlation between Allegroeu and Wayfair is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Allegroeu SA and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and Allegroeu 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 Allegroeu SA are associated (or correlated) with Wayfair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayfair has no effect on the direction of Allegroeu i.e., Allegroeu and Wayfair go up and down completely randomly.

Pair Corralation between Allegroeu and Wayfair

If you would invest  4,318  in Wayfair on September 7, 2024 and sell it today you would earn a total of  611.00  from holding Wayfair or generate 14.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Allegroeu SA  vs.  Wayfair

Allegroeu SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegroeu SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Allegroeu is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Wayfair

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wayfair are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Wayfair showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegroeu and Wayfair

The main advantage of trading using opposite Allegroeu and Wayfair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegroeu position performs unexpectedly, Wayfair 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 Wayfair will offset losses from the drop in Wayfair's long position.

The idea behind Allegroeu SA and Wayfair 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.