Correlation Between Tapestry and Pinterest

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

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

Diversification Opportunities for Tapestry and Pinterest

0.88

Correlation Coefficient

Tapestry  Pinterest

Very poor diversification

The 3 months correlation between Tapestry and Pinterest is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tapestry and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and Tapestry 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 Tapestry are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Tapestry i.e., Tapestry and Pinterest go up and down completely randomly.

Pair Corralation between Tapestry and Pinterest

Considering the 90-day investment horizon Tapestry is expected to generate 0.82 times more return on investment than Pinterest. However, Tapestry is 1.22 times less risky than Pinterest. It trades about 0.38 of its potential returns per unit of risk. Pinterest is currently generating about 0.25 per unit of risk. If you would invest  6,336  in Tapestry on April 17, 2025 and sell it today you would earn a total of  3,734  from holding Tapestry or generate 58.93% return on investment over 90 days.

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

Tapestry  vs.  Pinterest

Tapestry

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Pinterest

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Pinterest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tapestry and Pinterest

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

The idea behind Tapestry and Pinterest 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.