Correlation Between MercadoLibre and Farfetch
Can any of the company-specific risk be diversified away by investing in both MercadoLibre and Farfetch 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 MercadoLibre and Farfetch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MercadoLibre and Farfetch Ltd Class, you can compare the effects of market volatilities on MercadoLibre and Farfetch 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 MercadoLibre with a short position of Farfetch. Check out your portfolio center. Please also check ongoing floating volatility patterns of MercadoLibre and Farfetch.
Diversification Opportunities for MercadoLibre and Farfetch
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MercadoLibre and Farfetch is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MercadoLibre and Farfetch Ltd Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farfetch Class and MercadoLibre 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 MercadoLibre are associated (or correlated) with Farfetch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farfetch Class has no effect on the direction of MercadoLibre i.e., MercadoLibre and Farfetch go up and down completely randomly.
Pair Corralation between MercadoLibre and Farfetch
If you would invest 2.10 in Farfetch Ltd Class on January 26, 2024 and sell it today you would earn a total of 0.00 from holding Farfetch Ltd Class or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 4.76% |
Values | Daily Returns |
MercadoLibre vs. Farfetch Ltd Class
Performance |
Timeline |
MercadoLibre |
Farfetch Class |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MercadoLibre and Farfetch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MercadoLibre and Farfetch
The main advantage of trading using opposite MercadoLibre and Farfetch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MercadoLibre position performs unexpectedly, Farfetch 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 Farfetch will offset losses from the drop in Farfetch's long position.MercadoLibre vs. Sea | MercadoLibre vs. Vipshop Holdings Limited | MercadoLibre vs. Amazon Inc | MercadoLibre vs. JD Inc Adr |
Farfetch vs. JD Inc Adr | Farfetch vs. Alibaba Group Holding | Farfetch vs. Sea | Farfetch vs. Vipshop Holdings Limited |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |