Correlation Between Boohoo PLC and Overstockcom

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

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

Diversification Opportunities for Boohoo PLC and Overstockcom

0.0

Correlation Coefficient

Boohoo PLC  Overstockcom

Pay attention - limited upside

The 3 months correlation between Boohoo and Overstockcom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BoohooCom PLC ADR and Overstockcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstockcom and Boohoo PLC 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 BoohooCom PLC ADR are associated (or correlated) with Overstockcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overstockcom has no effect on the direction of Boohoo PLC i.e., Boohoo PLC and Overstockcom go up and down completely randomly.

Pair Corralation between Boohoo PLC and Overstockcom

If you would invest (100.00) in Overstockcom on December 25, 2024 and sell it today you would earn a total of  100.00  from holding Overstockcom or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BoohooCom PLC ADR  vs.  Overstockcom

BoohooCom PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days BoohooCom PLC ADR 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Overstockcom

Risk-Adjusted Performance

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.

Pair Trading with Boohoo PLC and Overstockcom

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

The idea behind BoohooCom PLC ADR and Overstockcom 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.