Correlation Between 1StdibsCom and Warby Parker

Can any of the company-specific risk be diversified away by investing in both 1StdibsCom and Warby Parker 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 1StdibsCom and Warby Parker into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1StdibsCom and Warby Parker, you can compare the effects of market volatilities on 1StdibsCom and Warby Parker 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 1StdibsCom with a short position of Warby Parker. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1StdibsCom and Warby Parker.

Diversification Opportunities for 1StdibsCom and Warby Parker

-0.93

Correlation Coefficient

1StdibsCom  Warby Parker

Pay attention - limited upside

The 3 months correlation between 1StdibsCom and Warby is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Warby Parker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warby Parker and 1StdibsCom 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 1StdibsCom are associated (or correlated) with Warby Parker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warby Parker has no effect on the direction of 1StdibsCom i.e., 1StdibsCom and Warby Parker go up and down completely randomly.

Pair Corralation between 1StdibsCom and Warby Parker

Given the investment horizon of 90 days 1StdibsCom is expected to under-perform the Warby Parker. In addition to that, 1StdibsCom is 1.3 times more volatile than Warby Parker. It trades about -0.03 of its total potential returns per unit of risk. Warby Parker is currently generating about 0.14 per unit of volatility. If you would invest  2,415  in Warby Parker on September 27, 2024 and sell it today you would earn a total of  157.00  from holding Warby Parker or generate 6.5% return on investment over 90 days.

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

1StdibsCom  vs.  Warby Parker

1StdibsCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1StdibsCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Warby Parker

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Warby Parker are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Warby Parker showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1StdibsCom and Warby Parker

The main advantage of trading using opposite 1StdibsCom and Warby Parker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom position performs unexpectedly, Warby Parker 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 Warby Parker will offset losses from the drop in Warby Parker's long position.

The idea behind 1StdibsCom and Warby Parker 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.