Correlation Between Fastighets and Chewy

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

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

Diversification Opportunities for Fastighets and Chewy

-0.51

Correlation Coefficient

Fastighets  Chewy

Excellent diversification

The 3 months correlation between Fastighets and Chewy is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fastighets AB Balder and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc and Fastighets 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 Fastighets AB Balder are associated (or correlated) with Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Fastighets i.e., Fastighets and Chewy go up and down completely randomly.

Pair Corralation between Fastighets and Chewy

Assuming the 90 days horizon Fastighets AB Balder is expected to under-perform the Chewy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fastighets AB Balder is 1.89 times less risky than Chewy. The pink sheet trades about -0.26 of its potential returns per unit of risk. The Chewy Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,651  in Chewy Inc on September 30, 2024 and sell it today you would earn a total of  756.00  from holding Chewy Inc or generate 28.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fastighets AB Balder  vs.  Chewy Inc

Fastighets AB Balder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fastighets AB Balder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chewy Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chewy Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Chewy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fastighets and Chewy

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

The idea behind Fastighets AB Balder and Chewy Inc 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.