Correlation Between Polished and Chewy

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

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

Diversification Opportunities for Polished and Chewy

0.59

Correlation Coefficient

Polished  Chewy

Very weak diversification

The 3 months correlation between Polished and Chewy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Polished and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc and Polished 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 Polished are associated (or correlated) with Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Polished i.e., Polished and Chewy go up and down completely randomly.

Pair Corralation between Polished and Chewy

If you would invest  57.00  in Polished on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Polished or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.4%
Values	Daily Returns

Polished  vs.  Chewy Inc

Polished

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polished has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Polished is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Chewy Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chewy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Polished and Chewy

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

The idea behind Polished and Chewy Inc 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.