Correlation Between Groupon and Pinterest
Can any of the company-specific risk be diversified away by investing in both Groupon and Pinterest 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 Groupon and Pinterest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groupon and Pinterest, you can compare the effects of market volatilities on Groupon and Pinterest 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 Groupon with a short position of Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupon and Pinterest.
Diversification Opportunities for Groupon and Pinterest
Average diversification
The 3 months correlation between Groupon and Pinterest is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Groupon and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and Groupon 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 Groupon are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Groupon i.e., Groupon and Pinterest go up and down completely randomly.
Pair Corralation between Groupon and Pinterest
Given the investment horizon of 90 days Groupon is expected to under-perform the Pinterest. In addition to that, Groupon is 1.14 times more volatile than Pinterest. It trades about -0.34 of its total potential returns per unit of risk. Pinterest is currently generating about 0.05 per unit of volatility. If you would invest 3,241 in Pinterest on November 5, 2024 and sell it today you would earn a total of 55.00 from holding Pinterest or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groupon vs. Pinterest
Performance |
| Timeline |
| Groupon |
Groupon and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groupon and Pinterest
The main advantage of trading using opposite Groupon and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groupon position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest's long position.The idea behind Groupon and Pinterest 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.| Pinterest vs. Twilio Inc | Pinterest vs. Meta Platforms | Pinterest vs. Alphabet Inc Class C | Pinterest vs. Alphabet Inc Class A |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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