Correlation Between Carvana Co and Farfetch

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

Diversification Opportunities for Carvana Co and Farfetch

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Carvana and Farfetch is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co Cl and Farfetch Ltd Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farfetch Ltd Cl and Carvana Co 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 Carvana Co Cl 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 Ltd Cl has no effect on the direction of Carvana Co i.e., Carvana Co and Farfetch go up and down completely randomly.

Pair Corralation between Carvana Co and Farfetch

Given the investment horizon of 90 days Carvana Co Cl is expected to under-perform the Farfetch. But the stock apears to be less risky and, when comparing its historical volatility, Carvana Co Cl is 1.07 times less risky than Farfetch. The stock trades about -0.13 of its potential returns per unit of risk. The Farfetch Ltd Cl is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  4,422  in Farfetch Ltd Cl on February 21, 2022 and sell it today you would lose (3,636)  from holding Farfetch Ltd Cl or give up 82.23% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Carvana Co Cl  vs.  Farfetch Ltd Cl

 Performance (%) 
      Timeline 
Carvana Co Cl 
Carvana Performance
0 of 100
Over the last 90 days Carvana Co Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Carvana Price Channel

Farfetch Ltd Cl 
Farfetch Performance
0 of 100
Over the last 90 days Farfetch Ltd Cl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Farfetch Price Channel

Carvana Co and Farfetch Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Carvana Co and Farfetch

The main advantage of trading using opposite Carvana Co and Farfetch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carvana Co 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.
The idea behind Carvana Co Cl and Farfetch Ltd Cl 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Stock Screener
Find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go