Correlation Between LYFT and Pubmatic
Can any of the company-specific risk be diversified away by investing in both LYFT and Pubmatic 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 LYFT and Pubmatic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LYFT Inc and Pubmatic, you can compare the effects of market volatilities on LYFT and Pubmatic 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 LYFT with a short position of Pubmatic. Check out your portfolio center. Please also check ongoing floating volatility patterns of LYFT and Pubmatic.
Diversification Opportunities for LYFT and Pubmatic
Poor diversification
The 3 months correlation between LYFT and Pubmatic is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LYFT Inc and Pubmatic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pubmatic and LYFT 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 LYFT Inc are associated (or correlated) with Pubmatic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pubmatic has no effect on the direction of LYFT i.e., LYFT and Pubmatic go up and down completely randomly.
Pair Corralation between LYFT and Pubmatic
Given the investment horizon of 90 days LYFT Inc is expected to generate 1.77 times more return on investment than Pubmatic. However, LYFT is 1.77 times more volatile than Pubmatic. It trades about 0.21 of its potential returns per unit of risk. Pubmatic is currently generating about 0.07 per unit of risk. If you would invest 1,367 in LYFT Inc on August 31, 2024 and sell it today you would earn a total of 351.00 from holding LYFT Inc or generate 25.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LYFT Inc vs. Pubmatic
Performance |
| Timeline |
| LYFT Inc |
| Pubmatic |
LYFT and Pubmatic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LYFT and Pubmatic
The main advantage of trading using opposite LYFT and Pubmatic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LYFT position performs unexpectedly, Pubmatic 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 Pubmatic will offset losses from the drop in Pubmatic's long position.The idea behind LYFT Inc and Pubmatic 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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