Correlation Between NFT and Wayfair

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

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

Diversification Opportunities for NFT and Wayfair

0.42

Correlation Coefficient

NFT  Wayfair

Very weak diversification

The 3 months correlation between NFT and Wayfair is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding NFT Limited and Wayfair in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayfair and NFT 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 NFT Limited 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 NFT i.e., NFT and Wayfair go up and down completely randomly.

Pair Corralation between NFT and Wayfair

Allowing for the 90-day total investment horizon NFT Limited is expected to generate 3.33 times more return on investment than Wayfair. However, NFT is 3.33 times more volatile than Wayfair. It trades about 0.1 of its potential returns per unit of risk. Wayfair is currently generating about 0.06 per unit of risk. If you would invest  369.00  in NFT Limited on August 31, 2024 and sell it today you would earn a total of  55.00  from holding NFT Limited or generate 14.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

NFT Limited  vs.  Wayfair

NFT Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NFT Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, NFT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Wayfair

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wayfair are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Wayfair showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NFT and Wayfair

The main advantage of trading using opposite NFT and Wayfair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NFT 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 NFT Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.