Correlation Between Social Media and Fluent

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

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

Diversification Opportunities for Social Media and Fluent

0.0

Correlation Coefficient

Social Media  Fluent

Pay attention - limited upside

The 3 months correlation between Social and Fluent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Social Media Venture and Fluent Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluent Inc and Social Media 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 Social Media Venture are associated (or correlated) with Fluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluent Inc has no effect on the direction of Social Media i.e., Social Media and Fluent go up and down completely randomly.

Pair Corralation between Social Media and Fluent

If you would invest (100.00) in Social Media Venture on October 11, 2024 and sell it today you would earn a total of  100.00  from holding Social Media Venture or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Social Media Venture  vs.  Fluent Inc

Social Media Venture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Social Media Venture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Social Media is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluent Inc 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.

Pair Trading with Social Media and Fluent

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

The idea behind Social Media Venture and Fluent Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.