Can any of the company-specific risk be diversified away by investing in both Dave and DoubleVerify Holdings 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 Dave and DoubleVerify Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dave Inc and DoubleVerify Holdings, you can compare the effects of market volatilities on Dave and DoubleVerify Holdings 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 Dave with a short position of DoubleVerify Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave and DoubleVerify Holdings.
Diversification Opportunities for Dave and DoubleVerify Holdings
The 3 months correlation between Dave and DoubleVerify is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dave Inc and DoubleVerify Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoubleVerify Holdings and Dave 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 Dave Inc are associated (or correlated) with DoubleVerify Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoubleVerify Holdings has no effect on the direction of Dave i.e., Dave and DoubleVerify Holdings go up and down completely randomly.
Pair Corralation between Dave and DoubleVerify Holdings
Given the investment horizon of 90 days Dave Inc is expected to under-perform the DoubleVerify Holdings. In addition to that, Dave is 2.17 times more volatile than DoubleVerify Holdings. It trades about -0.08 of its total potential returns per unit of risk. DoubleVerify Holdings is currently generating about 0.02 per unit of volatility. If you would invest 3,053 in DoubleVerify Holdings on September 7, 2023 and sell it today you would earn a total of 281.00 from holding DoubleVerify Holdings or generate 9.2% return on investment over 90 days.
Over the last 90 days Dave Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Dave is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Compared to the overall equity markets, risk-adjusted returns on investments in DoubleVerify Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, DoubleVerify Holdings is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Dave and DoubleVerify Holdings Volatility Contrast
Predicted Return Density
Pair Trading with Dave and DoubleVerify Holdings
The main advantage of trading using opposite Dave and DoubleVerify Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave position performs unexpectedly, DoubleVerify Holdings 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 DoubleVerify Holdings will offset losses from the drop in DoubleVerify Holdings' long position.
The idea behind Dave Inc and DoubleVerify Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Find insiders across different sectors to evaluate their impact on performance
Macroaxis helps investors of all levels and skills to maximize the upside of all their holdings and minimize the risk
associated with market volatility, economic swings, and company-specific events. View terms and conditions