Correlation Between EverQuote and Match

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

By analyzing existing cross correlation between EverQuote Class A and Match Group, you can compare the effects of market volatilities on EverQuote and Match 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 EverQuote with a short position of Match. Check out your portfolio center. Please also check ongoing floating volatility patterns of EverQuote and Match.

Diversification Opportunities for EverQuote and Match

-0.65

Correlation Coefficient

EverQuote  Match

Excellent diversification

The 3 months correlation between EverQuote and Match is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Match Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Match Group and EverQuote 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 EverQuote Class A are associated (or correlated) with Match. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Match Group has no effect on the direction of EverQuote i.e., EverQuote and Match go up and down completely randomly.

Pair Corralation between EverQuote and Match

Given the investment horizon of 90 days EverQuote Class A is expected to generate 2.1 times more return on investment than Match. However, EverQuote is 2.1 times more volatile than Match Group. It trades about 0.2 of its potential returns per unit of risk. Match Group is currently generating about -0.11 per unit of risk. If you would invest  1,690  in EverQuote Class A on February 9, 2024 and sell it today you would earn a total of  683.00  from holding EverQuote Class A or generate 40.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EverQuote Class A  vs.  Match Group

EverQuote Class A

Risk-Adjusted Performance

12 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EverQuote Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, EverQuote reported solid returns over the last few months and may actually be approaching a breakup point.

Match Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Match Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with EverQuote and Match

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

The idea behind EverQuote Class A and Match Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.