Correlation Between Marqeta and Twilio

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

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

Diversification Opportunities for Marqeta and Twilio

-0.4

Correlation Coefficient

Marqeta  Twilio

Very good diversification

The 3 months correlation between Marqeta and Twilio is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Marqeta and Twilio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twilio Inc and Marqeta 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 Marqeta are associated (or correlated) with Twilio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twilio Inc has no effect on the direction of Marqeta i.e., Marqeta and Twilio go up and down completely randomly.

Pair Corralation between Marqeta and Twilio

Allowing for the 90-day total investment horizon Marqeta is expected to generate 0.85 times more return on investment than Twilio. However, Marqeta is 1.18 times less risky than Twilio. It trades about 0.07 of its potential returns per unit of risk. Twilio Inc is currently generating about -0.01 per unit of risk. If you would invest  377.00  in Marqeta on December 29, 2024 and sell it today you would earn a total of  42.00  from holding Marqeta or generate 11.14% return on investment over 90 days.

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

Marqeta  vs.  Twilio Inc

Marqeta

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marqeta are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Marqeta reported solid returns over the last few months and may actually be approaching a breakup point.

Twilio Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Twilio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Twilio is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Marqeta and Twilio

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

The idea behind Marqeta and Twilio Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.