Correlation Between Yelp and Adevinta ASA
Can any of the company-specific risk be diversified away by investing in both Yelp and Adevinta ASA 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 Yelp and Adevinta ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yelp Inc and Adevinta ASA, you can compare the effects of market volatilities on Yelp and Adevinta ASA 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 Yelp with a short position of Adevinta ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yelp and Adevinta ASA.
Diversification Opportunities for Yelp and Adevinta ASA
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yelp and Adevinta is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Yelp Inc and Adevinta ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adevinta ASA and Yelp 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 Yelp Inc are associated (or correlated) with Adevinta ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adevinta ASA has no effect on the direction of Yelp i.e., Yelp and Adevinta ASA go up and down completely randomly.
Pair Corralation between Yelp and Adevinta ASA
Given the investment horizon of 90 days Yelp is expected to generate 2.1 times less return on investment than Adevinta ASA. But when comparing it to its historical volatility, Yelp Inc is 1.59 times less risky than Adevinta ASA. It trades about 0.04 of its potential returns per unit of risk. Adevinta ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 585.00 in Adevinta ASA on January 25, 2024 and sell it today you would earn a total of 543.00 from holding Adevinta ASA or generate 92.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Yelp Inc vs. Adevinta ASA
Performance |
Timeline |
Yelp Inc |
Adevinta ASA |
Yelp and Adevinta ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yelp and Adevinta ASA
The main advantage of trading using opposite Yelp and Adevinta ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yelp position performs unexpectedly, Adevinta ASA 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 Adevinta ASA will offset losses from the drop in Adevinta ASA's long position.The idea behind Yelp Inc and Adevinta ASA 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.Adevinta ASA vs. Twilio Inc | Adevinta ASA vs. Snap Inc | Adevinta ASA vs. Alphabet Inc Class A | Adevinta ASA vs. Pinterest |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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