Correlation Between Chewy and 1stdibs

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Chewy and 1stdibs 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 Chewy and 1stdibs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chewy Inc and 1stdibs, you can compare the effects of market volatilities on Chewy and 1stdibs 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 Chewy with a short position of 1stdibs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chewy and 1stdibs.

Diversification Opportunities for Chewy and 1stdibs

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Chewy and 1stdibs is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chewy Inc and 1stdibs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1stdibs and Chewy 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 Chewy Inc are associated (or correlated) with 1stdibs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1stdibs has no effect on the direction of Chewy i.e., Chewy and 1stdibs go up and down completely randomly.

Pair Corralation between Chewy and 1stdibs

Given the investment horizon of 90 days Chewy Inc is expected to generate 0.95 times more return on investment than 1stdibs. However, Chewy Inc is 1.05 times less risky than 1stdibs. It trades about 0.22 of its potential returns per unit of risk. 1stdibs is currently generating about 0.11 per unit of risk. If you would invest  3,185  in Chewy Inc on May 20, 2022 and sell it today you would earn a total of  1,414  from holding Chewy Inc or generate 44.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Chewy Inc  vs.  1stdibs

 Performance (%) 
       Timeline  
Chewy Inc 
Chewy Performance
17 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chewy Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Chewy showed solid returns over the last few months and may actually be approaching a breakup point.

Chewy Price Channel

1stdibs 
1stdibs Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 1stdibs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, 1stdibs reported solid returns over the last few months and may actually be approaching a breakup point.

1stdibs Price Channel

Chewy and 1stdibs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chewy and 1stdibs

The main advantage of trading using opposite Chewy and 1stdibs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chewy position performs unexpectedly, 1stdibs 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 1stdibs will offset losses from the drop in 1stdibs' long position.
The idea behind Chewy Inc and 1stdibs 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

Other Complementary Tools

Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go