Correlation Between Media and HubSpot

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

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

Diversification Opportunities for Media and HubSpot

0.16

Correlation Coefficient

Media  HubSpot

Average diversification

The 3 months correlation between Media and HubSpot is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and HubSpot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HubSpot and Media 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 Media and Games are associated (or correlated) with HubSpot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HubSpot has no effect on the direction of Media i.e., Media and HubSpot go up and down completely randomly.

Pair Corralation between Media and HubSpot

Assuming the 90 days trading horizon Media and Games is expected to under-perform the HubSpot. In addition to that, Media is 2.87 times more volatile than HubSpot. It trades about -0.18 of its total potential returns per unit of risk. HubSpot is currently generating about -0.02 per unit of volatility. If you would invest  68,200  in HubSpot on October 12, 2024 and sell it today you would lose (300.00) from holding HubSpot or give up 0.44% of portfolio value over 90 days.

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

Media and Games  vs.  HubSpot

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Media is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

HubSpot

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HubSpot are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, HubSpot reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Media and HubSpot

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

The idea behind Media and Games and HubSpot 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.