Correlation Between Wayfair and Interactive Strength

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

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

Diversification Opportunities for Wayfair and Interactive Strength

0.27

Correlation Coefficient

Wayfair  Interactive Strength

Modest diversification

The 3 months correlation between Wayfair and Interactive is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Wayfair and Interactive Strength Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Strength 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 Interactive Strength. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Strength has no effect on the direction of Wayfair i.e., Wayfair and Interactive Strength go up and down completely randomly.

Pair Corralation between Wayfair and Interactive Strength

Taking into account the 90-day investment horizon Wayfair is expected to under-perform the Interactive Strength. But the stock apears to be less risky and, when comparing its historical volatility, Wayfair is 4.16 times less risky than Interactive Strength. The stock trades about -0.28 of its potential returns per unit of risk. The Interactive Strength Common is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  175.00  in Interactive Strength Common on December 8, 2024 and sell it today you would earn a total of  36.00  from holding Interactive Strength Common or generate 20.57% return on investment over 90 days.

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

Wayfair  vs.  Interactive Strength Common

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.

Interactive Strength

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Strength Common are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Interactive Strength may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wayfair and Interactive Strength

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

The idea behind Wayfair and Interactive Strength Common 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..