Correlation Between Perion Network and Yelp
Can any of the company-specific risk be diversified away by investing in both Perion Network 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 Perion Network and Yelp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perion Network and Yelp Inc, you can compare the effects of market volatilities on Perion Network 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 Perion Network with a short position of Yelp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perion Network and Yelp.
Diversification Opportunities for Perion Network and Yelp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Perion and Yelp is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Perion Network and Yelp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yelp Inc and Perion Network 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 Perion Network 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 Perion Network i.e., Perion Network and Yelp go up and down completely randomly.
Pair Corralation between Perion Network and Yelp
Given the investment horizon of 90 days Perion Network is expected to generate 1.13 times less return on investment than Yelp. In addition to that, Perion Network is 1.17 times more volatile than Yelp Inc. It trades about 0.14 of its total potential returns per unit of risk. Yelp Inc is currently generating about 0.18 per unit of volatility. If you would invest 3,337 in Yelp Inc on August 24, 2024 and sell it today you would earn a total of 247.00 from holding Yelp Inc or generate 7.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Perion Network vs. Yelp Inc
Performance |
| Timeline |
| Perion Network |
| Yelp Inc |
Perion Network and Yelp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perion Network and Yelp
The main advantage of trading using opposite Perion Network and Yelp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perion Network 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.| Perion Network vs. MediaAlpha | Perion Network vs. Vivid Seats | Perion Network vs. Jiayin Group | Perion Network vs. Hello Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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