Correlation Between SilverBox Corp and Chewy

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

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

Diversification Opportunities for SilverBox Corp and Chewy

0.37

Correlation Coefficient

SilverBox Corp  Chewy

Weak diversification

The 3 months correlation between SilverBox and Chewy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding SilverBox Corp III and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc and SilverBox 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 SilverBox Corp III 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 SilverBox Corp i.e., SilverBox Corp and Chewy go up and down completely randomly.

Pair Corralation between SilverBox Corp and Chewy

Given the investment horizon of 90 days SilverBox Corp is expected to generate 4.36 times less return on investment than Chewy. But when comparing it to its historical volatility, SilverBox Corp III is 1.44 times less risky than Chewy. It trades about 0.02 of its potential returns per unit of risk. Chewy Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,090  in Chewy Inc on September 18, 2024 and sell it today you would earn a total of  265.00  from holding Chewy Inc or generate 8.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.56%
Values	Daily Returns

SilverBox Corp III  vs.  Chewy Inc

SilverBox Corp III

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days SilverBox Corp III has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SilverBox Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Chewy Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chewy Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Chewy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SilverBox Corp and Chewy

The main advantage of trading using opposite SilverBox Corp and Chewy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SilverBox 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 SilverBox Corp III 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.