Correlation Between Sprout Social and Dubber

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

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

Diversification Opportunities for Sprout Social and Dubber

0.02

Correlation Coefficient

Sprout Social  Dubber

Significant diversification

The 3 months correlation between Sprout and Dubber is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Dubber Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dubber Limited and Sprout Social 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 Sprout Social are associated (or correlated) with Dubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dubber Limited has no effect on the direction of Sprout Social i.e., Sprout Social and Dubber go up and down completely randomly.

Pair Corralation between Sprout Social and Dubber

Considering the 90-day investment horizon Sprout Social is expected to under-perform the Dubber. But the stock apears to be less risky and, when comparing its historical volatility, Sprout Social is 12.62 times less risky than Dubber. The stock trades about -0.02 of its potential returns per unit of risk. The Dubber Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Dubber Limited on October 5, 2024 and sell it today you would lose (28.50) from holding Dubber Limited or give up 91.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Sprout Social  vs.  Dubber Limited

Sprout Social

Risk-Adjusted Performance

4 of 100

Insignificant

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

Dubber Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dubber Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dubber reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprout Social and Dubber

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

The idea behind Sprout Social and Dubber Limited 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.