Correlation Between Bumble and Model N

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

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

Diversification Opportunities for Bumble and Model N

0.55

Correlation Coefficient

Bumble  Model N

Very weak diversification

The 1 month correlation between Bumble and Model is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bumble Inc and Model N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Model N and Bumble 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 Bumble Inc are associated (or correlated) with Model N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Model N has no effect on the direction of Bumble i.e., Bumble and Model N go up and down completely randomly.

Pair Corralation between Bumble and Model N

Given the investment horizon of 90 days Bumble Inc is expected to generate 21.09 times more return on investment than Model N. However, Bumble is 21.09 times more volatile than Model N. It trades about 0.21 of its potential returns per unit of risk. Model N is currently generating about 0.19 per unit of risk. If you would invest  1,012  in Bumble Inc on March 2, 2024 and sell it today you would earn a total of  131.00  from holding Bumble Inc or generate 12.94% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bumble Inc  vs.  Model N

Bumble Inc

Risk-Adjusted Performance

16 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bumble Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental drivers, Bumble disclosed solid returns over the last few months and may actually be approaching a breakup point.

Model N

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Model N are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Model N is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bumble and Model N

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

The idea behind Bumble Inc and Model N 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.