Correlation Between Expensify and Lovesac

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

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

Diversification Opportunities for Expensify and Lovesac

0.08

Correlation Coefficient

Expensify  Lovesac

Significant diversification

The 3 months correlation between Expensify and Lovesac is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Expensify and The Lovesac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lovesac and Expensify 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 Expensify are associated (or correlated) with Lovesac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lovesac has no effect on the direction of Expensify i.e., Expensify and Lovesac go up and down completely randomly.

Pair Corralation between Expensify and Lovesac

Given the investment horizon of 90 days Expensify is expected to under-perform the Lovesac. In addition to that, Expensify is 1.19 times more volatile than The Lovesac. It trades about -0.1 of its total potential returns per unit of risk. The Lovesac is currently generating about -0.09 per unit of volatility. If you would invest  2,283  in The Lovesac on January 21, 2024 and sell it today you would lose (203.00) from holding The Lovesac or give up 8.89% of portfolio value over 90 days.

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

Expensify  vs.  The Lovesac

Expensify

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lovesac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Lovesac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Expensify and Lovesac

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

The idea behind Expensify and The Lovesac 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.