Correlation Between 1847 Goedeker and Lightinthebox Holding

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Can any of the company-specific risk be diversified away by investing in both 1847 Goedeker and Lightinthebox Holding 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 1847 Goedeker and Lightinthebox Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1847 Goedeker and Lightinthebox Holding Co, you can compare the effects of market volatilities on 1847 Goedeker and Lightinthebox Holding 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 1847 Goedeker with a short position of Lightinthebox Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1847 Goedeker and Lightinthebox Holding.

Diversification Opportunities for 1847 Goedeker and Lightinthebox Holding

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between 1847 Goedeker and Lightinthebox is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding 1847 Goedeker and Lightinthebox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightinthebox Holding and 1847 Goedeker 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 1847 Goedeker are associated (or correlated) with Lightinthebox Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightinthebox Holding has no effect on the direction of 1847 Goedeker i.e., 1847 Goedeker and Lightinthebox Holding go up and down completely randomly.

Pair Corralation between 1847 Goedeker and Lightinthebox Holding

Given the investment horizon of 90 days 1847 Goedeker is expected to generate 1.8 times more return on investment than Lightinthebox Holding. However, 1847 Goedeker is 1.8 times more volatile than Lightinthebox Holding Co. It trades about 0.15 of its potential returns per unit of risk. Lightinthebox Holding Co is currently generating about 0.21 per unit of risk. If you would invest  130.00  in 1847 Goedeker on February 25, 2022 and sell it today you would earn a total of  22.00  from holding 1847 Goedeker or generate 16.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

1847 Goedeker  vs.  Lightinthebox Holding Co

 Performance (%) 
      Timeline 
1847 Goedeker 
1847 Goedeker Performance
0 of 100
Over the last 90 days 1847 Goedeker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

1847 Goedeker Price Channel

Lightinthebox Holding 
Lightinthebox Performance
0 of 100
Over the last 90 days Lightinthebox Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lightinthebox Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lightinthebox Price Channel

1847 Goedeker and Lightinthebox Holding Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with 1847 Goedeker and Lightinthebox Holding

The main advantage of trading using opposite 1847 Goedeker and Lightinthebox Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1847 Goedeker position performs unexpectedly, Lightinthebox Holding 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 Lightinthebox Holding will offset losses from the drop in Lightinthebox Holding's long position.
The idea behind 1847 Goedeker and Lightinthebox Holding Co 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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