Correlation Between BoohooCom PLC and Wayfair

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both BoohooCom 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 BoohooCom PLC and Wayfair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BoohooCom PLC ADR and Wayfair, you can compare the effects of market volatilities on BoohooCom 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 BoohooCom PLC with a short position of Wayfair. Check out your portfolio center. Please also check ongoing floating volatility patterns of BoohooCom PLC and Wayfair.

Diversification Opportunities for BoohooCom PLC and Wayfair

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between BoohooCom and Wayfair is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding BoohooCom PLC ADR and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and BoohooCom 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 BoohooCom PLC ADR 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 BoohooCom PLC i.e., BoohooCom PLC and Wayfair go up and down completely randomly.

Pair Corralation between BoohooCom PLC and Wayfair

Assuming the 90 days horizon BoohooCom PLC ADR is expected to generate 0.55 times more return on investment than Wayfair. However, BoohooCom PLC ADR is 1.83 times less risky than Wayfair. It trades about 0.3 of its potential returns per unit of risk. Wayfair is currently generating about 0.14 per unit of risk. If you would invest  712.00  in BoohooCom PLC ADR on September 6, 2024 and sell it today you would earn a total of  109.00  from holding BoohooCom PLC ADR or generate 15.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

BoohooCom PLC ADR  vs.  Wayfair

 Performance 
       Timeline  
BoohooCom PLC ADR 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BoohooCom PLC ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BoohooCom PLC showed solid returns over the last few months and may actually be approaching a breakup point.
Wayfair 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Wayfair are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Wayfair showed solid returns over the last few months and may actually be approaching a breakup point.

BoohooCom PLC and Wayfair Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BoohooCom PLC and Wayfair

The main advantage of trading using opposite BoohooCom PLC and Wayfair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BoohooCom 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.
The idea behind BoohooCom PLC ADR 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets