Correlation Between Warby Parker and AptarGroup

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

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

Diversification Opportunities for Warby Parker and AptarGroup

0.25

Correlation Coefficient

Warby Parker  AptarGroup

Modest diversification

The 3 months correlation between Warby and AptarGroup is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Warby Parker and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup and Warby Parker 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 Warby Parker are associated (or correlated) with AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Warby Parker i.e., Warby Parker and AptarGroup go up and down completely randomly.

Pair Corralation between Warby Parker and AptarGroup

Given the investment horizon of 90 days Warby Parker is expected to under-perform the AptarGroup. In addition to that, Warby Parker is 2.42 times more volatile than AptarGroup. It trades about -0.12 of its total potential returns per unit of risk. AptarGroup is currently generating about -0.09 per unit of volatility. If you would invest  15,807  in AptarGroup on December 21, 2024 and sell it today you would lose (1,325) from holding AptarGroup or give up 8.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Warby Parker  vs.  AptarGroup

Warby Parker

Risk-Adjusted Performance

Very Weak

Over the last 90 days Warby Parker 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 fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AptarGroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days AptarGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Warby Parker and AptarGroup

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

The idea behind Warby Parker and AptarGroup 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.