Correlation Between Live Ventures and Wayfair

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

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

Diversification Opportunities for Live Ventures and Wayfair

0.89

Correlation Coefficient

Live Ventures  Wayfair

Very poor diversification

The 3 months correlation between Live and Wayfair is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and Live Ventures 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 Live Ventures are associated (or correlated) with Wayfair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayfair has no effect on the direction of Live Ventures i.e., Live Ventures and Wayfair go up and down completely randomly.

Pair Corralation between Live Ventures and Wayfair

Given the investment horizon of 90 days Live Ventures is expected to under-perform the Wayfair. But the stock apears to be less risky and, when comparing its historical volatility, Live Ventures is 1.31 times less risky than Wayfair. The stock trades about -0.2 of its potential returns per unit of risk. The Wayfair is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  4,475  in Wayfair on December 24, 2024 and sell it today you would lose (1,109) from holding Wayfair or give up 24.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Live Ventures  vs.  Wayfair

Live Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Wayfair

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wayfair 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 basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Live Ventures and Wayfair

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

The idea behind Live Ventures and Wayfair 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.