Correlation Between Arena Group and DoorDash

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

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

Diversification Opportunities for Arena Group and DoorDash

-0.17

Correlation Coefficient

Arena Group  DoorDash

Good diversification

The 3 months correlation between Arena and DoorDash is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Arena Group Holdings and DoorDash Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoorDash Class A and Arena Group 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 Arena Group Holdings are associated (or correlated) with DoorDash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoorDash Class A has no effect on the direction of Arena Group i.e., Arena Group and DoorDash go up and down completely randomly.

Pair Corralation between Arena Group and DoorDash

Given the investment horizon of 90 days Arena Group Holdings is expected to under-perform the DoorDash. In addition to that, Arena Group is 3.48 times more volatile than DoorDash Class A. It trades about -0.37 of its total potential returns per unit of risk. DoorDash Class A is currently generating about -0.2 per unit of volatility. If you would invest  13,782  in DoorDash Class A on January 24, 2024 and sell it today you would lose (1,055) from holding DoorDash Class A or give up 7.65% of portfolio value over 90 days.

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

Arena Group Holdings  vs.  DoorDash Class A

Arena Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arena Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Arena Group is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

DoorDash Class A

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DoorDash Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, DoorDash demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arena Group and DoorDash

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

The idea behind Arena Group Holdings and DoorDash Class A 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 the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.