Correlation Between Wayfair and Reebonz Holding

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

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

Diversification Opportunities for Wayfair and Reebonz Holding

0.0

Correlation Coefficient

Wayfair  Reebonz Holding

Pay attention - limited upside

The 3 months correlation between Wayfair and Reebonz is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and Reebonz Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reebonz Holding and Wayfair 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 Wayfair are associated (or correlated) with Reebonz Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reebonz Holding has no effect on the direction of Wayfair i.e., Wayfair and Reebonz Holding go up and down completely randomly.

Pair Corralation between Wayfair and Reebonz Holding

If you would invest  4,318  in Wayfair on September 9, 2024 and sell it today you would earn a total of  1,035  from holding Wayfair or generate 23.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Wayfair  vs.  Reebonz Holding

Wayfair

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wayfair are ranked lower than 8 (%) 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.

Reebonz Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reebonz Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Reebonz Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wayfair and Reebonz Holding

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

The idea behind Wayfair and Reebonz Holding 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.