Correlation Between Outbrain and Shutterstock

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

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

Diversification Opportunities for Outbrain and Shutterstock

-0.01

Correlation Coefficient

Outbrain  Shutterstock

Good diversification

The 3 months correlation between Outbrain and Shutterstock is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and Shutterstock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shutterstock 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 Shutterstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shutterstock has no effect on the direction of Outbrain i.e., Outbrain and Shutterstock go up and down completely randomly.

Pair Corralation between Outbrain and Shutterstock

Allowing for the 90-day total investment horizon Outbrain is expected to generate 1.02 times more return on investment than Shutterstock. However, Outbrain is 1.02 times more volatile than Shutterstock. It trades about 0.06 of its potential returns per unit of risk. Shutterstock is currently generating about -0.02 per unit of risk. If you would invest  387.00  in Outbrain on September 24, 2024 and sell it today you would earn a total of  348.00  from holding Outbrain or generate 89.92% return on investment over 90 days.

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

Outbrain  vs.  Shutterstock

Outbrain

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 20 (%) 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.

Shutterstock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shutterstock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Outbrain and Shutterstock

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

The idea behind Outbrain and Shutterstock 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.