Correlation Between Groupon and Taboola
Can any of the company-specific risk be diversified away by investing in both Groupon and Taboola 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 Taboola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groupon and Taboola Ltd Warrant, you can compare the effects of market volatilities on Groupon and Taboola 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 Taboola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupon and Taboola.
Diversification Opportunities for Groupon and Taboola
Significant diversification
The 3 months correlation between Groupon and Taboola is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Groupon and Taboola Ltd Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taboola Warrant 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 Taboola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taboola Warrant has no effect on the direction of Groupon i.e., Groupon and Taboola go up and down completely randomly.
Pair Corralation between Groupon and Taboola
Given the investment horizon of 90 days Groupon is expected to under-perform the Taboola. But the stock apears to be less risky and, when comparing its historical volatility, Groupon is 2.62 times less risky than Taboola. The stock trades about -0.04 of its potential returns per unit of risk. The Taboola Ltd Warrant is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Taboola Ltd Warrant on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Taboola Ltd Warrant or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groupon vs. Taboola Ltd Warrant
Performance |
| Timeline |
| Groupon |
| Taboola Warrant |
Groupon and Taboola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groupon and Taboola
The main advantage of trading using opposite Groupon and Taboola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groupon position performs unexpectedly, Taboola 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 Taboola will offset losses from the drop in Taboola's long position.The idea behind Groupon and Taboola Ltd Warrant 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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