Correlation Between EverQuote and Facebook

Can any of the company-specific risk be diversified away by investing in both EverQuote and Facebook 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 Facebook 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 Facebook, you can compare the effects of market volatilities on EverQuote and Facebook 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 Facebook. Check out your portfolio center. Please also check ongoing floating volatility patterns of EverQuote and Facebook.

Diversification Opportunities for EverQuote and Facebook

0.0

Correlation Coefficient

EverQuote  Facebook

Pay attention - limited upside

The 3 months correlation between EverQuote and Facebook is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Facebook in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Facebook 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 Facebook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Facebook has no effect on the direction of EverQuote i.e., EverQuote and Facebook go up and down completely randomly.

Pair Corralation between EverQuote and Facebook

If you would invest (100.00) in Facebook on September 25, 2024 and sell it today you would earn a total of  100.00  from holding Facebook or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EverQuote Class A  vs.  Facebook

EverQuote Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EverQuote Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Facebook

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Facebook has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Facebook is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EverQuote and Facebook

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

The idea behind EverQuote Class A and Facebook 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 Transaction History module to view history of all your transactions and understand their impact on performance.