Correlation Between Kidpik Corp and Chewy

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

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

Diversification Opportunities for Kidpik Corp and Chewy

-0.12

Correlation Coefficient

Kidpik Corp  Chewy

Good diversification

The 3 months correlation between Kidpik and Chewy is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kidpik Corp and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc and Kidpik Corp 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 Kidpik Corp are associated (or correlated) with Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Kidpik Corp i.e., Kidpik Corp and Chewy go up and down completely randomly.

Pair Corralation between Kidpik Corp and Chewy

Considering the 90-day investment horizon Kidpik Corp is expected to under-perform the Chewy. In addition to that, Kidpik Corp is 7.63 times more volatile than Chewy Inc. It trades about -0.2 of its total potential returns per unit of risk. Chewy Inc is currently generating about 0.01 per unit of volatility. If you would invest  3,403  in Chewy Inc on December 25, 2024 and sell it today you would lose (1.00) from holding Chewy Inc or give up 0.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.27%
Values	Daily Returns

Kidpik Corp  vs.  Chewy Inc

Kidpik Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kidpik Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Chewy Inc

Risk-Adjusted Performance

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.

Pair Trading with Kidpik Corp and Chewy

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

The idea behind Kidpik Corp and Chewy 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.