Correlation Between Outbrain and Groupon
Can any of the company-specific risk be diversified away by investing in both Outbrain and Groupon 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 Outbrain and Groupon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outbrain and Groupon, you can compare the effects of market volatilities on Outbrain and Groupon 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 Outbrain with a short position of Groupon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outbrain and Groupon.
Diversification Opportunities for Outbrain and Groupon
Weak diversification
The 3 months correlation between Outbrain and Groupon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Outbrain 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 Outbrain are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Outbrain i.e., Outbrain and Groupon go up and down completely randomly.
Pair Corralation between Outbrain and Groupon
Allowing for the 90-day total investment horizon Outbrain is expected to generate 0.45 times more return on investment than Groupon. However, Outbrain is 2.23 times less risky than Groupon. It trades about 0.04 of its potential returns per unit of risk. Groupon is currently generating about -0.05 per unit of risk. If you would invest 469.00 in Outbrain on August 24, 2024 and sell it today you would earn a total of 41.00 from holding Outbrain or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outbrain vs. Groupon
Performance |
| Timeline |
| Outbrain |
| Groupon |
Outbrain and Groupon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outbrain and Groupon
The main advantage of trading using opposite Outbrain and Groupon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outbrain position performs unexpectedly, Groupon 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 Groupon will offset losses from the drop in Groupon's long position.| Outbrain vs. Perion Network | Outbrain vs. Taboola Ltd Warrant | Outbrain vs. Fiverr International | Outbrain vs. ANGI Homeservices |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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