Correlation Between Overstockcom and Wayfair

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

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

Diversification Opportunities for Overstockcom and Wayfair

0.23

Correlation Coefficient

Overstockcom  Wayfair

Modest diversification

The 3 months correlation between Overstockcom and Wayfair is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Overstockcom and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and Overstockcom 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 Overstockcom are associated (or correlated) with Wayfair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayfair has no effect on the direction of Overstockcom i.e., Overstockcom and Wayfair go up and down completely randomly.

Pair Corralation between Overstockcom and Wayfair

If you would invest  3,092  in Overstockcom on August 7, 2024 and sell it today you would earn a total of  0.00  from holding Overstockcom or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Overstockcom  vs.  Wayfair

Overstockcom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Overstockcom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Overstockcom is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Wayfair

Risk-Adjusted Performance

2 of 100

Very Weak

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

Pair Trading with Overstockcom and Wayfair

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

The idea behind Overstockcom and Wayfair 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.