Correlation Between Pinterest and Ecovyst

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

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

Diversification Opportunities for Pinterest and Ecovyst

0.32

Correlation Coefficient

Pinterest  Ecovyst

Weak diversification

The 3 months correlation between Pinterest and Ecovyst is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and Pinterest 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 Pinterest are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of Pinterest i.e., Pinterest and Ecovyst go up and down completely randomly.

Pair Corralation between Pinterest and Ecovyst

Given the investment horizon of 90 days Pinterest is expected to generate 1.37 times more return on investment than Ecovyst. However, Pinterest is 1.37 times more volatile than Ecovyst. It trades about 0.05 of its potential returns per unit of risk. Ecovyst is currently generating about -0.09 per unit of risk. If you would invest  2,915  in Pinterest on December 30, 2024 and sell it today you would earn a total of  232.00  from holding Pinterest or generate 7.96% return on investment over 90 days.

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

Pinterest  vs.  Ecovyst

Pinterest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Pinterest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ecovyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecovyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pinterest and Ecovyst

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

The idea behind Pinterest and Ecovyst 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.