Correlation Between Brilliant Earth and Kidpik Corp

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

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

Diversification Opportunities for Brilliant Earth and Kidpik Corp

-0.26

Correlation Coefficient

Brilliant Earth  Kidpik Corp

Very good diversification

The 3 months correlation between Brilliant and Kidpik is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Earth Group and Kidpik Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kidpik Corp and Brilliant Earth 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 Brilliant Earth Group are associated (or correlated) with Kidpik Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kidpik Corp has no effect on the direction of Brilliant Earth i.e., Brilliant Earth and Kidpik Corp go up and down completely randomly.

Pair Corralation between Brilliant Earth and Kidpik Corp

Given the investment horizon of 90 days Brilliant Earth Group is expected to under-perform the Kidpik Corp. But the stock apears to be less risky and, when comparing its historical volatility, Brilliant Earth Group is 2.38 times less risky than Kidpik Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Kidpik Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  216.00  in Kidpik Corp on September 20, 2024 and sell it today you would lose (16.00) from holding Kidpik Corp or give up 7.41% of portfolio value over 90 days.

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

Brilliant Earth Group  vs.  Kidpik Corp

Brilliant Earth Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brilliant Earth Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Kidpik Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brilliant Earth and Kidpik Corp

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

The idea behind Brilliant Earth Group and Kidpik Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..