Correlation Between EBay and Upbound
Can any of the company-specific risk be diversified away by investing in both EBay and Upbound 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 Upbound into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eBay Inc and Upbound Group, you can compare the effects of market volatilities on EBay and Upbound 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 Upbound. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and Upbound.
Diversification Opportunities for EBay and Upbound
Very good diversification
The 3 months correlation between EBay and Upbound is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc and Upbound Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upbound Group 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 are associated (or correlated) with Upbound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upbound Group has no effect on the direction of EBay i.e., EBay and Upbound go up and down completely randomly.
Pair Corralation between EBay and Upbound
Given the investment horizon of 90 days EBay is expected to generate 1.21 times less return on investment than Upbound. But when comparing it to its historical volatility, eBay Inc is 1.38 times less risky than Upbound. It trades about 0.06 of its potential returns per unit of risk. Upbound Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,153 in Upbound Group on August 30, 2024 and sell it today you would earn a total of 1,292 from holding Upbound Group or generate 60.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
eBay Inc vs. Upbound Group
Performance |
| Timeline |
| eBay Inc |
| Upbound Group |
EBay and Upbound Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBay and Upbound
The main advantage of trading using opposite EBay and Upbound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay position performs unexpectedly, Upbound 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 Upbound will offset losses from the drop in Upbound's long position.The idea behind eBay Inc and Upbound Group 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.| Upbound vs. 7125 percent Fixed Rate | Upbound vs. MGIC Investment Corp | Upbound vs. Cincinnati Financial | Upbound vs. Plexus Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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