Correlation Between Stellar Bancorp and Twitter

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

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

Diversification Opportunities for Stellar Bancorp and Twitter

-0.49

Correlation Coefficient

Stellar Bancorp  Twitter

Very good diversification

The 3 months correlation between Stellar and Twitter is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stellar Bancorp and Twitter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twitter and Stellar Bancorp 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 Stellar Bancorp are associated (or correlated) with Twitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twitter has no effect on the direction of Stellar Bancorp i.e., Stellar Bancorp and Twitter go up and down completely randomly.

Pair Corralation between Stellar Bancorp and Twitter

If you would invest  5,370  in Twitter on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Twitter or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Stellar Bancorp  vs.  Twitter

Stellar Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stellar Bancorp 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Twitter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Twitter is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Stellar Bancorp and Twitter

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

The idea behind Stellar Bancorp and Twitter 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.