Correlation Between Live Ventures and Williams Sonoma

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

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

Diversification Opportunities for Live Ventures and Williams Sonoma

-0.3

Correlation Coefficient

Live Ventures  Williams Sonoma

Very good diversification

The 3 months correlation between Live and Williams is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Williams Sonoma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Sonoma 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 Williams Sonoma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Sonoma has no effect on the direction of Live Ventures i.e., Live Ventures and Williams Sonoma go up and down completely randomly.

Pair Corralation between Live Ventures and Williams Sonoma

Given the investment horizon of 90 days Live Ventures is expected to under-perform the Williams Sonoma. But the stock apears to be less risky and, when comparing its historical volatility, Live Ventures is 1.02 times less risky than Williams Sonoma. The stock trades about -0.15 of its potential returns per unit of risk. The Williams Sonoma is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,282  in Williams Sonoma on September 22, 2024 and sell it today you would earn a total of  3,086  from holding Williams Sonoma or generate 20.19% return on investment over 90 days.

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

Live Ventures  vs.  Williams Sonoma

Live Ventures

Risk-Adjusted Performance

0 of 100

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Williams Sonoma

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Sonoma are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Williams Sonoma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Ventures and Williams Sonoma

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

The idea behind Live Ventures and Williams Sonoma 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.