Correlation Between Kidpik Corp and IPower

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

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

Diversification Opportunities for Kidpik Corp and IPower

-0.08

Correlation Coefficient

Kidpik Corp  IPower

Good diversification

The 3 months correlation between Kidpik and IPower is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kidpik Corp and iPower Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPower Inc and Kidpik Corp 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 Kidpik Corp are associated (or correlated) with IPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPower Inc has no effect on the direction of Kidpik Corp i.e., Kidpik Corp and IPower go up and down completely randomly.

Pair Corralation between Kidpik Corp and IPower

Considering the 90-day investment horizon Kidpik Corp is expected to generate 3.13 times less return on investment than IPower. But when comparing it to its historical volatility, Kidpik Corp is 1.16 times less risky than IPower. It trades about 0.02 of its potential returns per unit of risk. iPower Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  52.00  in iPower Inc on August 30, 2024 and sell it today you would earn a total of  27.10  from holding iPower Inc or generate 52.12% return on investment over 90 days.

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

Kidpik Corp  vs.  iPower Inc

Kidpik Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kidpik Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Kidpik Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

iPower Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iPower Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with Kidpik Corp and IPower

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

The idea behind Kidpik Corp and iPower 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.