Correlation Between MarineMax and Williams Sonoma

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

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

Diversification Opportunities for MarineMax and Williams Sonoma

0.32

Correlation Coefficient

MarineMax  Williams Sonoma

Weak diversification

The 3 months correlation between MarineMax and Williams is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MarineMax and Williams Sonoma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Sonoma and MarineMax 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 MarineMax are associated (or correlated) with Williams Sonoma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Sonoma has no effect on the direction of MarineMax i.e., MarineMax and Williams Sonoma go up and down completely randomly.

Pair Corralation between MarineMax and Williams Sonoma

Considering the 90-day investment horizon MarineMax is expected to generate 4.52 times less return on investment than Williams Sonoma. But when comparing it to its historical volatility, MarineMax is 1.12 times less risky than Williams Sonoma. It trades about 0.03 of its potential returns per unit of risk. Williams Sonoma is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  13,379  in Williams Sonoma on August 30, 2024 and sell it today you would earn a total of  3,760  from holding Williams Sonoma or generate 28.1% return on investment over 90 days.

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

MarineMax  vs.  Williams Sonoma

MarineMax

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MarineMax are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, MarineMax may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Williams Sonoma

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Sonoma are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Williams Sonoma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MarineMax and Williams Sonoma

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

The idea behind MarineMax and Williams Sonoma 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.