Correlation Between Outbrain and SPAR

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

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

Diversification Opportunities for Outbrain and SPAR

0.36

Correlation Coefficient

Outbrain  SPAR

Weak diversification

The 3 months correlation between Outbrain and SPAR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR 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 SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of Outbrain i.e., Outbrain and SPAR go up and down completely randomly.

Pair Corralation between Outbrain and SPAR

Allowing for the 90-day total investment horizon Outbrain is expected to generate 2.12 times more return on investment than SPAR. However, Outbrain is 2.12 times more volatile than SPAR Group. It trades about -0.12 of its potential returns per unit of risk. SPAR Group is currently generating about -0.41 per unit of risk. If you would invest  632.00  in Outbrain on November 29, 2024 and sell it today you would lose (88.00) from holding Outbrain or give up 13.92% of portfolio value over 90 days.

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

Outbrain  vs.  SPAR Group

Outbrain

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Outbrain is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SPAR Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPAR Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Outbrain and SPAR

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

The idea behind Outbrain and SPAR 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.