Correlation Between ASOS Plc and Wayfair
Can any of the company-specific risk be diversified away by investing in both ASOS Plc 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 ASOS Plc and Wayfair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASOS Plc and Wayfair, you can compare the effects of market volatilities on ASOS Plc 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 ASOS Plc with a short position of Wayfair. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS Plc and Wayfair.
Diversification Opportunities for ASOS Plc and Wayfair
Very good diversification
The 3 months correlation between ASOS and Wayfair is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ASOS Plc and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and ASOS Plc 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 ASOS Plc 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 ASOS Plc i.e., ASOS Plc and Wayfair go up and down completely randomly.
Pair Corralation between ASOS Plc and Wayfair
Assuming the 90 days horizon ASOS Plc is expected to generate 0.51 times more return on investment than Wayfair. However, ASOS Plc is 1.95 times less risky than Wayfair. It trades about 0.03 of its potential returns per unit of risk. Wayfair is currently generating about 0.01 per unit of risk. If you would invest 490.00 in ASOS Plc on September 6, 2024 and sell it today you would earn a total of 51.00 from holding ASOS Plc or generate 10.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.6% |
Values | Daily Returns |
ASOS Plc vs. Wayfair
Performance |
Timeline |
ASOS Plc |
Wayfair |
ASOS Plc and Wayfair Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ASOS Plc and Wayfair
The main advantage of trading using opposite ASOS Plc and Wayfair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASOS Plc 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.ASOS Plc vs. BoohooCom PLC ADR | ASOS Plc vs. Allegroeu SA | ASOS Plc vs. ZALANDO SE ADR | ASOS Plc vs. AKA Brands Holding |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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