Correlation Between Outbrain and Magnite
Can any of the company-specific risk be diversified away by investing in both Outbrain and Magnite 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 Magnite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outbrain and Magnite, you can compare the effects of market volatilities on Outbrain and Magnite 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 Magnite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outbrain and Magnite.
Diversification Opportunities for Outbrain and Magnite
Poor diversification
The 3 months correlation between Outbrain and Magnite is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and Magnite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnite 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 Magnite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnite has no effect on the direction of Outbrain i.e., Outbrain and Magnite go up and down completely randomly.
Pair Corralation between Outbrain and Magnite
Allowing for the 90-day total investment horizon Outbrain is expected to generate 3.58 times less return on investment than Magnite. But when comparing it to its historical volatility, Outbrain is 1.55 times less risky than Magnite. It trades about 0.06 of its potential returns per unit of risk. Magnite is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,372 in Magnite on August 28, 2024 and sell it today you would earn a total of 288.00 from holding Magnite or generate 20.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outbrain vs. Magnite
Performance |
| Timeline |
| Outbrain |
| Magnite |
Outbrain and Magnite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outbrain and Magnite
The main advantage of trading using opposite Outbrain and Magnite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outbrain position performs unexpectedly, Magnite 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 Magnite will offset losses from the drop in Magnite's long position.| Outbrain vs. Perion Network | Outbrain vs. Taboola Ltd Warrant | Outbrain vs. Fiverr International | Outbrain vs. ANGI Homeservices |
| Magnite vs. Deluxe | Magnite vs. Clear Channel Outdoor | Magnite vs. Entravision Communications | Magnite vs. Innovid Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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