Correlation Between Wayfair and Ranpak Holdings

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

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

Diversification Opportunities for Wayfair and Ranpak Holdings

0.53

Correlation Coefficient

Wayfair  Ranpak Holdings

Very weak diversification

The 3 months correlation between Wayfair and Ranpak is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and Ranpak Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ranpak Holdings Corp 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 Ranpak Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ranpak Holdings Corp has no effect on the direction of Wayfair i.e., Wayfair and Ranpak Holdings go up and down completely randomly.

Pair Corralation between Wayfair and Ranpak Holdings

Taking into account the 90-day investment horizon Wayfair is expected to under-perform the Ranpak Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Wayfair is 1.58 times less risky than Ranpak Holdings. The stock trades about -0.07 of its potential returns per unit of risk. The Ranpak Holdings Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  690.00  in Ranpak Holdings Corp on December 28, 2024 and sell it today you would lose (133.00) from holding Ranpak Holdings Corp or give up 19.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Wayfair  vs.  Ranpak Holdings Corp

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.

Ranpak Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ranpak Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Wayfair and Ranpak Holdings

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

The idea behind Wayfair and Ranpak Holdings Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.