Correlation Between Perion Network and EverQuote

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

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

Diversification Opportunities for Perion Network and EverQuote

-0.34

Correlation Coefficient

Perion Network  EverQuote

Very good diversification

The 3 months correlation between Perion and EverQuote is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Perion Network and EverQuote Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverQuote Class A and Perion Network 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 Perion Network are associated (or correlated) with EverQuote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverQuote Class A has no effect on the direction of Perion Network i.e., Perion Network and EverQuote go up and down completely randomly.

Pair Corralation between Perion Network and EverQuote

Given the investment horizon of 90 days Perion Network is expected to under-perform the EverQuote. But the stock apears to be less risky and, when comparing its historical volatility, Perion Network is 1.29 times less risky than EverQuote. The stock trades about -0.05 of its potential returns per unit of risk. The EverQuote Class A is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,464  in EverQuote Class A on September 26, 2024 and sell it today you would earn a total of  306.00  from holding EverQuote Class A or generate 20.9% return on investment over 90 days.

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

Perion Network  vs.  EverQuote Class A

Perion Network

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perion Network are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Perion Network is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

EverQuote Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EverQuote Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Perion Network and EverQuote

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

The idea behind Perion Network and EverQuote Class A 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 Stocks Directory module to find actively traded stocks across global markets.