Correlation Between Wayfair and Allegroeu

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

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

Diversification Opportunities for Wayfair and Allegroeu

0.0

Correlation Coefficient

Wayfair  Allegroeu

Pay attention - limited upside

The 3 months correlation between Wayfair and Allegroeu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and Allegroeu SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegroeu SA and Wayfair 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 Wayfair are associated (or correlated) with Allegroeu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegroeu SA has no effect on the direction of Wayfair i.e., Wayfair and Allegroeu go up and down completely randomly.

Pair Corralation between Wayfair and Allegroeu

If you would invest  4,190  in Wayfair on September 4, 2024 and sell it today you would earn a total of  618.00  from holding Wayfair or generate 14.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Wayfair  vs.  Allegroeu SA

Wayfair

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wayfair are ranked lower than 6 (%) 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.

Allegroeu SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegroeu SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Allegroeu is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wayfair and Allegroeu

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

The idea behind Wayfair and Allegroeu SA 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.