Correlation Between Match and Yelp
Can any of the company-specific risk be diversified away by investing in both Match and Yelp 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 Match and Yelp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Match Group and Yelp Inc, you can compare the effects of market volatilities on Match and Yelp 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 Match with a short position of Yelp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Match and Yelp.
Diversification Opportunities for Match and Yelp
Pay attention - limited upside
The 3 months correlation between Match and Yelp is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Match Group and Yelp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yelp Inc and Match 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 Match Group are associated (or correlated) with Yelp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yelp Inc has no effect on the direction of Match i.e., Match and Yelp go up and down completely randomly.
Pair Corralation between Match and Yelp
Given the investment horizon of 90 days Match Group is expected to under-perform the Yelp. In addition to that, Match is 2.05 times more volatile than Yelp Inc. It trades about -0.11 of its total potential returns per unit of risk. Yelp Inc is currently generating about 0.23 per unit of volatility. If you would invest 3,449 in Yelp Inc on August 30, 2024 and sell it today you would earn a total of 359.00 from holding Yelp Inc or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Match Group vs. Yelp Inc
Performance |
| Timeline |
| Match Group |
| Yelp Inc |
Match and Yelp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Match and Yelp
The main advantage of trading using opposite Match and Yelp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Match position performs unexpectedly, Yelp 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 Yelp will offset losses from the drop in Yelp's long position.The idea behind Match Group and Yelp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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