Correlation Between EverQuote and Genius Sports

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

Diversification Opportunities for EverQuote and Genius Sports

0.65

Correlation Coefficient

EverQuote  Genius Sports

Poor diversification

The 3 months correlation between EverQuote and Genius is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Genius Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genius Sports 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 Genius Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genius Sports has no effect on the direction of EverQuote i.e., EverQuote and Genius Sports go up and down completely randomly.

Pair Corralation between EverQuote and Genius Sports

Given the investment horizon of 90 days EverQuote Class A is expected to generate 1.46 times more return on investment than Genius Sports. However, EverQuote is 1.46 times more volatile than Genius Sports. It trades about 0.14 of its potential returns per unit of risk. Genius Sports is currently generating about 0.09 per unit of risk. If you would invest  1,969  in EverQuote Class A on December 29, 2024 and sell it today you would earn a total of  840.00  from holding EverQuote Class A or generate 42.66% return on investment over 90 days.

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

EverQuote Class A  vs.  Genius Sports

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 10 (%) 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.

Genius Sports

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genius Sports are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Genius Sports demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EverQuote and Genius Sports

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

The idea behind EverQuote Class A and Genius Sports 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.