Correlation Between EverQuote and Vivid Seats

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

Diversification Opportunities for EverQuote and Vivid Seats

0.37

Correlation Coefficient

EverQuote  Vivid Seats

Weak diversification

The 3 months correlation between EverQuote and Vivid is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Vivid Seats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivid Seats 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 Vivid Seats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivid Seats has no effect on the direction of EverQuote i.e., EverQuote and Vivid Seats go up and down completely randomly.

Pair Corralation between EverQuote and Vivid Seats

Given the investment horizon of 90 days EverQuote Class A is expected to generate 1.33 times more return on investment than Vivid Seats. However, EverQuote is 1.33 times more volatile than Vivid Seats. It trades about 0.12 of its potential returns per unit of risk. Vivid Seats is currently generating about 0.08 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EverQuote Class A  vs.  Vivid Seats

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.

Vivid Seats

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vivid Seats are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Vivid Seats unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EverQuote and Vivid Seats

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

The idea behind EverQuote Class A and Vivid Seats 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.