Correlation Between Peloton Interactive and OneSpaWorld Holdings

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

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

Diversification Opportunities for Peloton Interactive and OneSpaWorld Holdings

0.41

Correlation Coefficient

Peloton Interactive  OneSpaWorld Holdings

Very weak diversification

The 3 months correlation between Peloton and OneSpaWorld is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Peloton Interactive and OneSpaWorld Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSpaWorld Holdings and Peloton Interactive 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 Peloton Interactive are associated (or correlated) with OneSpaWorld Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSpaWorld Holdings has no effect on the direction of Peloton Interactive i.e., Peloton Interactive and OneSpaWorld Holdings go up and down completely randomly.

Pair Corralation between Peloton Interactive and OneSpaWorld Holdings

Given the investment horizon of 90 days Peloton Interactive is expected to under-perform the OneSpaWorld Holdings. In addition to that, Peloton Interactive is 1.45 times more volatile than OneSpaWorld Holdings. It trades about -0.07 of its total potential returns per unit of risk. OneSpaWorld Holdings is currently generating about 0.23 per unit of volatility. If you would invest  1,292  in OneSpaWorld Holdings on February 6, 2024 and sell it today you would earn a total of  192.00  from holding OneSpaWorld Holdings or generate 14.86% return on investment over 90 days.

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

Peloton Interactive  vs.  OneSpaWorld Holdings

Peloton Interactive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peloton Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

OneSpaWorld Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OneSpaWorld Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, OneSpaWorld Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Peloton Interactive and OneSpaWorld Holdings

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

The idea behind Peloton Interactive and OneSpaWorld Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..