Correlation Between Spotify Technology and Trivago NV
Can any of the company-specific risk be diversified away by investing in both Spotify Technology and Trivago NV 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 Spotify Technology and Trivago NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Trivago NV, you can compare the effects of market volatilities on Spotify Technology and Trivago NV 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 Spotify Technology with a short position of Trivago NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Trivago NV.
Diversification Opportunities for Spotify Technology and Trivago NV
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Spotify and Trivago is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Trivago NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trivago NV and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with Trivago NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trivago NV has no effect on the direction of Spotify Technology i.e., Spotify Technology and Trivago NV go up and down completely randomly.
Pair Corralation between Spotify Technology and Trivago NV
Given the investment horizon of 90 days Spotify Technology is expected to generate 1.45 times less return on investment than Trivago NV. But when comparing it to its historical volatility, Spotify Technology SA is 1.33 times less risky than Trivago NV. It trades about 0.32 of its potential returns per unit of risk. Trivago NV is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 165.00 in Trivago NV on August 30, 2024 and sell it today you would earn a total of 53.00 from holding Trivago NV or generate 32.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. Trivago NV
Performance |
| Timeline |
| Spotify Technology |
| Trivago NV |
Spotify Technology and Trivago NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Trivago NV
The main advantage of trading using opposite Spotify Technology and Trivago NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology position performs unexpectedly, Trivago NV 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 Trivago NV will offset losses from the drop in Trivago NV's long position.| Spotify Technology vs. Snap Inc | Spotify Technology vs. Twilio Inc | Spotify Technology vs. Fiverr International | Spotify Technology vs. Baidu Inc |
| Trivago NV vs. Upexi Inc | Trivago NV vs. Cheetah Mobile | Trivago NV vs. Comscore | Trivago NV vs. PropertyGuru 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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