Correlation Between Heartbeam Warrant and Outbrain

Can any of the company-specific risk be diversified away by investing in both Heartbeam Warrant and Outbrain 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 Heartbeam Warrant and Outbrain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heartbeam Warrant and Outbrain, you can compare the effects of market volatilities on Heartbeam Warrant and Outbrain 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 Heartbeam Warrant with a short position of Outbrain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartbeam Warrant and Outbrain.

Diversification Opportunities for Heartbeam Warrant and Outbrain

0.58

Correlation Coefficient

Heartbeam Warrant  Outbrain

Very weak diversification

The 3 months correlation between Heartbeam and Outbrain is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Heartbeam Warrant and Outbrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outbrain and Heartbeam Warrant 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 Heartbeam Warrant are associated (or correlated) with Outbrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outbrain has no effect on the direction of Heartbeam Warrant i.e., Heartbeam Warrant and Outbrain go up and down completely randomly.

Pair Corralation between Heartbeam Warrant and Outbrain

Assuming the 90 days horizon Heartbeam Warrant is expected to under-perform the Outbrain. In addition to that, Heartbeam Warrant is 2.87 times more volatile than Outbrain. It trades about -0.05 of its total potential returns per unit of risk. Outbrain is currently generating about 0.52 per unit of volatility. If you would invest  520.00  in Outbrain on September 25, 2024 and sell it today you would earn a total of  240.00  from holding Outbrain or generate 46.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Heartbeam Warrant  vs.  Outbrain

Heartbeam Warrant

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heartbeam Warrant are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Heartbeam Warrant may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Outbrain

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Outbrain sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heartbeam Warrant and Outbrain

The main advantage of trading using opposite Heartbeam Warrant and Outbrain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartbeam Warrant position performs unexpectedly, Outbrain 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 Outbrain will offset losses from the drop in Outbrain's long position.

The idea behind Heartbeam Warrant and Outbrain 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.