Correlation Between TheRealReal and Liquidity Services

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

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

Diversification Opportunities for TheRealReal and Liquidity Services

0.68

Correlation Coefficient

TheRealReal  Liquidity Services

Poor diversification

The 3 months correlation between TheRealReal and Liquidity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding TheRealReal and Liquidity Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquidity Services and TheRealReal 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 TheRealReal are associated (or correlated) with Liquidity Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquidity Services has no effect on the direction of TheRealReal i.e., TheRealReal and Liquidity Services go up and down completely randomly.

Pair Corralation between TheRealReal and Liquidity Services

Given the investment horizon of 90 days TheRealReal is expected to generate 2.12 times more return on investment than Liquidity Services. However, TheRealReal is 2.12 times more volatile than Liquidity Services. It trades about -0.03 of its potential returns per unit of risk. Liquidity Services is currently generating about -0.17 per unit of risk. If you would invest  643.00  in TheRealReal on May 5, 2025 and sell it today you would lose (119.00) from holding TheRealReal or give up 18.51% of portfolio value over 90 days.

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

TheRealReal  vs.  Liquidity Services

TheRealReal

Risk-Adjusted Performance

Very Weak

Over the last 90 days TheRealReal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Liquidity Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liquidity Services 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 Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TheRealReal and Liquidity Services

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

The idea behind TheRealReal and Liquidity Services 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.