Correlation Between EverQuote and Arena Group

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

By analyzing existing cross correlation between EverQuote Class A and Arena Group Holdings, you can compare the effects of market volatilities on EverQuote and Arena Group 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 EverQuote with a short position of Arena Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of EverQuote and Arena Group.

Diversification Opportunities for EverQuote and Arena Group

-0.13

Correlation Coefficient

EverQuote  Arena Group

Good diversification

The 3 months correlation between EverQuote and Arena is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Arena Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Group Holdings and EverQuote 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 EverQuote Class A are associated (or correlated) with Arena Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Group Holdings has no effect on the direction of EverQuote i.e., EverQuote and Arena Group go up and down completely randomly.

Pair Corralation between EverQuote and Arena Group

Given the investment horizon of 90 days EverQuote Class A is expected to generate 0.83 times more return on investment than Arena Group. However, EverQuote Class A is 1.21 times less risky than Arena Group. It trades about 0.12 of its potential returns per unit of risk. Arena Group Holdings is currently generating about 0.03 per unit of risk. If you would invest  1,919  in EverQuote Class A on November 29, 2024 and sell it today you would earn a total of  643.00  from holding EverQuote Class A or generate 33.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EverQuote Class A  vs.  Arena Group Holdings

EverQuote Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EverQuote Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, EverQuote reported solid returns over the last few months and may actually be approaching a breakup point.

Arena Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arena Group Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Arena Group may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with EverQuote and Arena Group

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

The idea behind EverQuote Class A and Arena Group Holdings 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.