Correlation Between Spotify Technology and Fiverr International

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

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

Diversification Opportunities for Spotify Technology and Fiverr International

-0.4

Correlation Coefficient

Spotify Technology  Fiverr International

Very good diversification

The 3 months correlation between Spotify and Fiverr is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Fiverr International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiverr International and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with Fiverr International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiverr International has no effect on the direction of Spotify Technology i.e., Spotify Technology and Fiverr International go up and down completely randomly.

Pair Corralation between Spotify Technology and Fiverr International

Given the investment horizon of 90 days Spotify Technology SA is expected to generate 1.04 times more return on investment than Fiverr International. However, Spotify Technology is 1.04 times more volatile than Fiverr International. It trades about 0.12 of its potential returns per unit of risk. Fiverr International is currently generating about -0.1 per unit of risk. If you would invest  45,179  in Spotify Technology SA on December 29, 2024 and sell it today you would earn a total of  10,937  from holding Spotify Technology SA or generate 24.21% return on investment over 90 days.

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

Spotify Technology SA  vs.  Fiverr International

Spotify Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spotify Technology SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Spotify Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fiverr International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fiverr International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Spotify Technology and Fiverr International

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

The idea behind Spotify Technology SA and Fiverr International 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.