Correlation Between EBay and Party City

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

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

Diversification Opportunities for EBay and Party City

0.0

Correlation Coefficient

EBay  Party City

Pay attention - limited upside

The 3 months correlation between EBay and Party is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EBay Inc NT and Party City Holdco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Party City Holdco and EBay 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 EBay Inc NT are associated (or correlated) with Party City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Party City Holdco has no effect on the direction of EBay i.e., EBay and Party City go up and down completely randomly.

Pair Corralation between EBay and Party City

If you would invest  5.51  in Party City Holdco on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Party City Holdco or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EBay Inc NT  vs.  Party City Holdco

EBay Inc NT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBay Inc NT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, EBay is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Party City Holdco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Party City Holdco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Party City is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EBay and Party City

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

The idea behind EBay Inc NT and Party City Holdco 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.