Correlation Between Williams Sonoma and Crayon Group

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

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

Diversification Opportunities for Williams Sonoma and Crayon Group

-0.38

Correlation Coefficient

Williams Sonoma  Crayon Group

Very good diversification

The 3 months correlation between Williams and Crayon is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Williams Sonoma and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding and Williams Sonoma 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 Williams Sonoma are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Williams Sonoma i.e., Williams Sonoma and Crayon Group go up and down completely randomly.

Pair Corralation between Williams Sonoma and Crayon Group

Considering the 90-day investment horizon Williams Sonoma is expected to generate 0.76 times more return on investment than Crayon Group. However, Williams Sonoma is 1.31 times less risky than Crayon Group. It trades about 0.1 of its potential returns per unit of risk. Crayon Group Holding is currently generating about 0.02 per unit of risk. If you would invest  5,598  in Williams Sonoma on September 26, 2024 and sell it today you would earn a total of  13,175  from holding Williams Sonoma or generate 235.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Williams Sonoma  vs.  Crayon Group Holding

Williams Sonoma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Sonoma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Williams Sonoma displayed solid returns over the last few months and may actually be approaching a breakup point.

Crayon Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Williams Sonoma and Crayon Group

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

The idea behind Williams Sonoma and Crayon Group Holding 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.