Correlation Between Williams Sonoma and Foxx Development

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

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

Diversification Opportunities for Williams Sonoma and Foxx Development

-0.35

Correlation Coefficient

Williams Sonoma  Foxx Development

Very good diversification

The 3 months correlation between Williams and Foxx is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Williams Sonoma and Foxx Development Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxx Development Holdings 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 Foxx Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxx Development Holdings has no effect on the direction of Williams Sonoma i.e., Williams Sonoma and Foxx Development go up and down completely randomly.

Pair Corralation between Williams Sonoma and Foxx Development

Considering the 90-day investment horizon Williams Sonoma is expected to under-perform the Foxx Development. But the stock apears to be less risky and, when comparing its historical volatility, Williams Sonoma is 7.24 times less risky than Foxx Development. The stock trades about -0.05 of its potential returns per unit of risk. The Foxx Development Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  511.00  in Foxx Development Holdings on December 25, 2024 and sell it today you would lose (43.00) from holding Foxx Development Holdings or give up 8.41% of portfolio value over 90 days.

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

Williams Sonoma  vs.  Foxx Development Holdings

Williams Sonoma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Williams Sonoma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Foxx Development Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foxx Development Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Foxx Development showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Williams Sonoma and Foxx Development

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

The idea behind Williams Sonoma and Foxx Development Holdings 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.