Correlation Between Outbrain and Pop Culture

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

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

Diversification Opportunities for Outbrain and Pop Culture

-0.31

Correlation Coefficient

Outbrain  Pop Culture

Very good diversification

The 3 months correlation between Outbrain and Pop is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and Pop Culture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pop Culture Group and Outbrain 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 Outbrain are associated (or correlated) with Pop Culture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pop Culture Group has no effect on the direction of Outbrain i.e., Outbrain and Pop Culture go up and down completely randomly.

Pair Corralation between Outbrain and Pop Culture

Allowing for the 90-day total investment horizon Outbrain is expected to generate 0.64 times more return on investment than Pop Culture. However, Outbrain is 1.57 times less risky than Pop Culture. It trades about 0.46 of its potential returns per unit of risk. Pop Culture Group is currently generating about -0.08 per unit of risk. If you would invest  530.00  in Outbrain on September 14, 2024 and sell it today you would earn a total of  165.00  from holding Outbrain or generate 31.13% return on investment over 90 days.

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

Outbrain  vs.  Pop Culture Group

Outbrain

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Outbrain sustained solid returns over the last few months and may actually be approaching a breakup point.

Pop Culture Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pop Culture Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Pop Culture is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Outbrain and Pop Culture

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

The idea behind Outbrain and Pop Culture Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.