Correlation Between Wayfair and Macys

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

By analyzing existing cross correlation between Wayfair and Macys Inc, you can compare the effects of market volatilities on Wayfair and Macys 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 Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wayfair and Macys.

Diversification Opportunities for Wayfair and Macys

0.44

Correlation Coefficient

Wayfair  Macys

Very weak diversification

The 3 months correlation between Wayfair and Macys is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Wayfair i.e., Wayfair and Macys go up and down completely randomly.

Pair Corralation between Wayfair and Macys

Taking into account the 90-day investment horizon Wayfair is expected to under-perform the Macys. In addition to that, Wayfair is 2.07 times more volatile than Macys Inc. It trades about -0.31 of its total potential returns per unit of risk. Macys Inc is currently generating about -0.19 per unit of volatility. If you would invest  1,523  in Macys Inc on December 4, 2024 and sell it today you would lose (122.00) from holding Macys Inc or give up 8.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Wayfair  vs.  Macys Inc

Wayfair

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wayfair has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Macys Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Wayfair and Macys

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

The idea behind Wayfair and Macys 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.