Correlation Between EBay and 1stdibs

By analyzing existing cross correlation between EBay Inc and 1stdibs, you can compare the effects of market volatilities on EBay 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 EBay with a short position of 1stdibs. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and 1stdibs.

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Can any of the company-specific risk be diversified away by investing in both EBay 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 EBay and 1stdibs into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for EBay and 1stdibs

-0.18
  Correlation Coefficient
EBay Inc
1stdibs

Good diversification

The 3 months correlation between EBay and 1stdibs is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding EBay Inc and 1stdibs in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on 1stdibs and EBay 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 EBay 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 EBay i.e., EBay and 1stdibs go up and down completely randomly.

Pair Corralation between EBay and 1stdibs

Given the investment horizon of 90 days EBay Inc is expected to generate 0.28 times more return on investment than 1stdibs. However, EBay Inc is 3.63 times less risky than 1stdibs. It trades about 0.08 of its potential returns per unit of risk. 1stdibs is currently generating about -0.05 per unit of risk. If you would invest  3,432  in EBay Inc on July 22, 2021 and sell it today you would earn a total of  4,165  from holding EBay Inc or generate 121.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy18.67%
ValuesDaily Returns

EBay Inc  vs.  1stdibs

 Performance (%) 
      Timeline 
EBay Inc 
 EBay Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in EBay Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, EBay may actually be approaching a critical reversion point that can send shares even higher in November 2021.

EBay Price Channel

1stdibs 
 1stdibs Performance
0 of 100
Over the last 90 days 1stdibs has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in November 2021. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

1stdibs Price Channel

EBay and 1stdibs Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with EBay and 1stdibs

The main advantage of trading using opposite EBay and 1stdibs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay 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 EBay 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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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