Correlation Between Vimeo and Bumble
Can any of the company-specific risk be diversified away by investing in both Vimeo and Bumble 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 Vimeo and Bumble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vimeo Inc and Bumble Inc, you can compare the effects of market volatilities on Vimeo and Bumble 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 Vimeo with a short position of Bumble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vimeo and Bumble.
Diversification Opportunities for Vimeo and Bumble
Poor diversification
The 3 months correlation between Vimeo and Bumble is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vimeo Inc and Bumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumble Inc and Vimeo 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 Vimeo Inc are associated (or correlated) with Bumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumble Inc has no effect on the direction of Vimeo i.e., Vimeo and Bumble go up and down completely randomly.
Pair Corralation between Vimeo and Bumble
Given the investment horizon of 90 days Vimeo Inc is expected to generate 1.06 times more return on investment than Bumble. However, Vimeo is 1.06 times more volatile than Bumble Inc. It trades about -0.11 of its potential returns per unit of risk. Bumble Inc is currently generating about -0.13 per unit of risk. If you would invest 698.00 in Vimeo Inc on October 26, 2024 and sell it today you would lose (45.50) from holding Vimeo Inc or give up 6.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vimeo Inc vs. Bumble Inc
Performance |
| Timeline |
| Vimeo Inc |
| Bumble Inc |
Vimeo and Bumble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vimeo and Bumble
The main advantage of trading using opposite Vimeo and Bumble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vimeo position performs unexpectedly, Bumble 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 Bumble will offset losses from the drop in Bumble's long position.The idea behind Vimeo Inc and Bumble Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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