Correlation Between Match and TrueCar

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

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

Diversification Opportunities for Match and TrueCar

-0.19

Correlation Coefficient

Match  TrueCar

Good diversification

The 3 months correlation between Match and TrueCar is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Match Group and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar and Match 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 Match Group are associated (or correlated) with TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of Match i.e., Match and TrueCar go up and down completely randomly.

Pair Corralation between Match and TrueCar

Given the investment horizon of 90 days Match Group is expected to generate 0.54 times more return on investment than TrueCar. However, Match Group is 1.84 times less risky than TrueCar. It trades about -0.22 of its potential returns per unit of risk. TrueCar is currently generating about -0.4 per unit of risk. If you would invest  3,570  in Match Group on December 2, 2024 and sell it today you would lose (399.00) from holding Match Group or give up 11.18% of portfolio value over 90 days.

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

Match Group  vs.  TrueCar

Match Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Match Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Match is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

TrueCar

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueCar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Match and TrueCar

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

The idea behind Match Group and TrueCar 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.