Correlation Between Pinterest and Peloton Interactive

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

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

Diversification Opportunities for Pinterest and Peloton Interactive

-0.24

Correlation Coefficient

Pinterest  Peloton Interactive

Very good diversification

The 3 months correlation between Pinterest and Peloton is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive 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 Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of Pinterest i.e., Pinterest and Peloton Interactive go up and down completely randomly.

Pair Corralation between Pinterest and Peloton Interactive

Given the investment horizon of 90 days Pinterest is expected to generate 0.74 times more return on investment than Peloton Interactive. However, Pinterest is 1.36 times less risky than Peloton Interactive. It trades about 0.06 of its potential returns per unit of risk. Peloton Interactive is currently generating about -0.09 per unit of risk. If you would invest  3,230  in Pinterest on December 4, 2024 and sell it today you would earn a total of  327.00  from holding Pinterest or generate 10.12% return on investment over 90 days.

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

Pinterest  vs.  Peloton Interactive

Pinterest

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Pinterest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Peloton Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peloton Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Pinterest and Peloton Interactive

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

The idea behind Pinterest and Peloton Interactive 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.