Correlation Between 1StdibsCom and Williams Sonoma

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

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

Diversification Opportunities for 1StdibsCom and Williams Sonoma

0.95

Correlation Coefficient

1StdibsCom  Williams Sonoma

Almost no diversification

The 3 months correlation between 1StdibsCom and Williams is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Williams Sonoma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Sonoma and 1StdibsCom 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 1StdibsCom are associated (or correlated) with Williams Sonoma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Sonoma has no effect on the direction of 1StdibsCom i.e., 1StdibsCom and Williams Sonoma go up and down completely randomly.

Pair Corralation between 1StdibsCom and Williams Sonoma

Given the investment horizon of 90 days 1StdibsCom is expected to under-perform the Williams Sonoma. But the stock apears to be less risky and, when comparing its historical volatility, 1StdibsCom is 1.09 times less risky than Williams Sonoma. The stock trades about -0.02 of its potential returns per unit of risk. The Williams Sonoma is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,614  in Williams Sonoma on February 2, 2025 and sell it today you would earn a total of  10,442  from holding Williams Sonoma or generate 186.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

1StdibsCom  vs.  Williams Sonoma

1StdibsCom

Risk-Adjusted Performance

Very Weak

Over the last 90 days 1StdibsCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Williams Sonoma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Williams Sonoma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with 1StdibsCom and Williams Sonoma

The main advantage of trading using opposite 1StdibsCom and Williams Sonoma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom position performs unexpectedly, Williams Sonoma 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 Williams Sonoma will offset losses from the drop in Williams Sonoma's long position.

The idea behind 1StdibsCom and Williams Sonoma 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.

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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 the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.