Correlation Between Pinterest and Outbrain

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

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

Diversification Opportunities for Pinterest and Outbrain

-0.41

Correlation Coefficient

Pinterest  Outbrain

Very good diversification

The 3 months correlation between Pinterest and Outbrain is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Outbrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outbrain 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 Outbrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outbrain has no effect on the direction of Pinterest i.e., Pinterest and Outbrain go up and down completely randomly.

Pair Corralation between Pinterest and Outbrain

Given the investment horizon of 90 days Pinterest is expected to under-perform the Outbrain. But the stock apears to be less risky and, when comparing its historical volatility, Pinterest is 1.12 times less risky than Outbrain. The stock trades about -0.04 of its potential returns per unit of risk. The Outbrain is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  430.00  in Outbrain on September 25, 2024 and sell it today you would earn a total of  321.00  from holding Outbrain or generate 74.65% return on investment over 90 days.

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

Pinterest  vs.  Outbrain

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 abnormal fundamental drivers, Outbrain sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pinterest and Outbrain

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

The idea behind Pinterest and Outbrain 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.