Correlation Between Pinterest and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Pinterest and BBB Foods 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 Pinterest and BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinterest and BBB Foods, you can compare the effects of market volatilities on Pinterest and BBB Foods 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 Pinterest with a short position of BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinterest and BBB Foods.
Diversification Opportunities for Pinterest and BBB Foods
Average diversification
The 3 months correlation between Pinterest and BBB is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods and Pinterest 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 Pinterest are associated (or correlated) with BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Pinterest i.e., Pinterest and BBB Foods go up and down completely randomly.
Pair Corralation between Pinterest and BBB Foods
Given the investment horizon of 90 days Pinterest is expected to generate 1.11 times more return on investment than BBB Foods. However, Pinterest is 1.11 times more volatile than BBB Foods. It trades about -0.06 of its potential returns per unit of risk. BBB Foods is currently generating about -0.24 per unit of risk. If you would invest 3,226 in Pinterest on August 29, 2024 and sell it today you would lose (194.00) from holding Pinterest or give up 6.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pinterest vs. BBB Foods
Performance |
| Timeline |
| BBB Foods |
Pinterest and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pinterest and BBB Foods
The main advantage of trading using opposite Pinterest and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Pinterest vs. Twilio Inc | Pinterest vs. Meta Platforms | Pinterest vs. Alphabet Inc Class C | Pinterest vs. Alphabet Inc Class A |
| BBB Foods vs. BJs Wholesale Club | BBB Foods vs. Dollar General | BBB Foods vs. Dollar Tree | BBB Foods vs. Target |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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