Correlation Between EBay and Betterware

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

By analyzing existing cross correlation between eBay Inc and Betterware de Mxico,, you can compare the effects of market volatilities on EBay and Betterware 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 EBay with a short position of Betterware. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and Betterware.

Diversification Opportunities for EBay and Betterware

-0.33

Correlation Coefficient

EBay  Betterware

Very good diversification

The 3 months correlation between EBay and Betterware is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc and Betterware de Mxico, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betterware de Mxico, and EBay 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 eBay Inc are associated (or correlated) with Betterware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betterware de Mxico, has no effect on the direction of EBay i.e., EBay and Betterware go up and down completely randomly.

Pair Corralation between EBay and Betterware

Given the investment horizon of 90 days EBay is expected to generate 3.17 times less return on investment than Betterware. But when comparing it to its historical volatility, eBay Inc is 2.01 times less risky than Betterware. It trades about 0.03 of its potential returns per unit of risk. Betterware de Mxico, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  914.00  in Betterware de Mxico, on March 17, 2024 and sell it today you would earn a total of  668.00  from holding Betterware de Mxico, or generate 73.09% return on investment over 90 days.

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

eBay Inc  vs.  Betterware de Mxico,

eBay Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, EBay is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Betterware de Mxico,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Betterware de Mxico, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with EBay and Betterware

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

The idea behind eBay Inc and Betterware de Mxico, 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 CEOs Directory module to screen CEOs from public companies around the world.