Correlation Between Bumble and Vimeo
Can any of the company-specific risk be diversified away by investing in both Bumble and Vimeo 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 Vimeo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bumble Inc and Vimeo Inc, you can compare the effects of market volatilities on Bumble and Vimeo 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 Vimeo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumble and Vimeo.
Diversification Opportunities for Bumble and Vimeo
Poor diversification
The 3 months correlation between Bumble and Vimeo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bumble Inc and Vimeo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vimeo Inc 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 Vimeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vimeo Inc has no effect on the direction of Bumble i.e., Bumble and Vimeo go up and down completely randomly.
Pair Corralation between Bumble and Vimeo
Given the investment horizon of 90 days Bumble Inc is expected to under-perform the Vimeo. But the stock apears to be less risky and, when comparing its historical volatility, Bumble Inc is 1.06 times less risky than Vimeo. The stock trades about -0.13 of its potential returns per unit of risk. The Vimeo Inc is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 698.00 in Vimeo Inc on October 26, 2024 and sell it today you would lose (45.50) from holding Vimeo Inc or give up 6.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumble Inc vs. Vimeo Inc
Performance |
| Timeline |
| Bumble Inc |
| Vimeo Inc |
Bumble and Vimeo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumble and Vimeo
The main advantage of trading using opposite Bumble and Vimeo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumble position performs unexpectedly, Vimeo 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 Vimeo will offset losses from the drop in Vimeo's long position.The idea behind Bumble Inc and Vimeo Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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