Correlation Between ThredUp and OriginClear

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

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

Diversification Opportunities for ThredUp and OriginClear

-0.72

Correlation Coefficient

ThredUp  OriginClear

Pay attention - limited upside

The 3 months correlation between ThredUp and OriginClear is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ThredUp and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear and ThredUp 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 ThredUp are associated (or correlated) with OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of ThredUp i.e., ThredUp and OriginClear go up and down completely randomly.

Pair Corralation between ThredUp and OriginClear

Given the investment horizon of 90 days ThredUp is expected to generate 0.46 times more return on investment than OriginClear. However, ThredUp is 2.18 times less risky than OriginClear. It trades about 0.22 of its potential returns per unit of risk. OriginClear is currently generating about -0.08 per unit of risk. If you would invest  93.00  in ThredUp on October 9, 2024 and sell it today you would earn a total of  55.00  from holding ThredUp or generate 59.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

ThredUp  vs.  OriginClear

ThredUp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ThredUp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ThredUp reported solid returns over the last few months and may actually be approaching a breakup point.

OriginClear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OriginClear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ThredUp and OriginClear

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

The idea behind ThredUp and OriginClear 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.