Correlation Between Chewy and LOWES

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

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

Diversification Opportunities for Chewy and LOWES

-0.45

Correlation Coefficient

Chewy  LOWES

Very good diversification

The 3 months correlation between Chewy and LOWES is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chewy Inc and LOWES PANIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES PANIES INC and Chewy 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 Chewy Inc are associated (or correlated) with LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES PANIES INC has no effect on the direction of Chewy i.e., Chewy and LOWES go up and down completely randomly.

Pair Corralation between Chewy and LOWES

Given the investment horizon of 90 days Chewy Inc is expected to generate 1.9 times more return on investment than LOWES. However, Chewy is 1.9 times more volatile than LOWES PANIES INC. It trades about 0.02 of its potential returns per unit of risk. LOWES PANIES INC is currently generating about -0.15 per unit of risk. If you would invest  3,094  in Chewy Inc on September 12, 2024 and sell it today you would earn a total of  43.00  from holding Chewy Inc or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Chewy Inc  vs.  LOWES PANIES INC

Chewy Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chewy Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chewy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

LOWES PANIES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOWES PANIES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for LOWES PANIES INC investors.

Pair Trading with Chewy and LOWES

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

The idea behind Chewy Inc and LOWES PANIES INC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.