Correlation Between Liquidity Services and Chewy

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

Diversification Opportunities for Liquidity Services and Chewy

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Liquidity and Chewy is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Liquidity Services and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc and Liquidity Services 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 Liquidity Services are associated (or correlated) with Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Liquidity Services i.e., Liquidity Services and Chewy go up and down completely randomly.

Pair Corralation between Liquidity Services and Chewy

Given the investment horizon of 90 days Liquidity Services is expected to generate 1.02 times more return on investment than Chewy. However, Liquidity Services is 1.02 times more volatile than Chewy Inc. It trades about 0.05 of its potential returns per unit of risk. Chewy Inc is currently generating about 0.0 per unit of risk. If you would invest  997.00  in Liquidity Services on July 8, 2022 and sell it today you would earn a total of  733.00  from holding Liquidity Services or generate 73.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Liquidity Services  vs.  Chewy Inc

 Performance (%) 
       Timeline  
Liquidity Services 
Liquidity Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Liquidity Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Liquidity Services unveiled solid returns over the last few months and may actually be approaching a breakup point.

Liquidity Price Channel

Chewy Inc 
Chewy Performance
0 of 100
Over the last 90 days Chewy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Chewy Price Channel

Liquidity Services and Chewy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Liquidity Services and Chewy

The main advantage of trading using opposite Liquidity Services and Chewy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liquidity Services position performs unexpectedly, Chewy 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 Chewy will offset losses from the drop in Chewy's long position.
Liquidity Services vs. Amazon Inc
The idea behind Liquidity Services and Chewy Inc 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.
Chewy vs. Amazon Inc
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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