Correlation Between Lands End and EBay

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

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

Diversification Opportunities for Lands End and EBay

-0.31

Correlation Coefficient

Lands End  EBay

Very good diversification

The 3 months correlation between Lands and EBay is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lands End and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc and Lands End 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 Lands End are associated (or correlated) with EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Lands End i.e., Lands End and EBay go up and down completely randomly.

Pair Corralation between Lands End and EBay

Allowing for the 90-day total investment horizon Lands End is expected to under-perform the EBay. In addition to that, Lands End is 1.49 times more volatile than eBay Inc. It trades about -0.14 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.01 per unit of volatility. If you would invest  6,266  in eBay Inc on January 6, 2025 and sell it today you would lose (26.00) from holding eBay Inc or give up 0.41% of portfolio value over 90 days.

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

Lands End  vs.  eBay Inc

Lands End

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lands End has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

eBay Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days eBay Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, EBay is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lands End and EBay

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

The idea behind Lands End and eBay 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.