Correlation Between Shutterstock and BuzzFeed

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

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

Diversification Opportunities for Shutterstock and BuzzFeed

0.63

Correlation Coefficient

Shutterstock  BuzzFeed

Poor diversification

The 3 months correlation between Shutterstock and BuzzFeed is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shutterstock and BuzzFeed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BuzzFeed and Shutterstock 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 Shutterstock are associated (or correlated) with BuzzFeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BuzzFeed has no effect on the direction of Shutterstock i.e., Shutterstock and BuzzFeed go up and down completely randomly.

Pair Corralation between Shutterstock and BuzzFeed

Given the investment horizon of 90 days Shutterstock is expected to generate 0.71 times more return on investment than BuzzFeed. However, Shutterstock is 1.4 times less risky than BuzzFeed. It trades about -0.13 of its potential returns per unit of risk. BuzzFeed is currently generating about -0.21 per unit of risk. If you would invest  3,168  in Shutterstock on November 29, 2024 and sell it today you would lose (888.00) from holding Shutterstock or give up 28.03% of portfolio value over 90 days.

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

Shutterstock  vs.  BuzzFeed

Shutterstock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shutterstock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BuzzFeed

Risk-Adjusted Performance

Very Weak

Over the last 90 days BuzzFeed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Shutterstock and BuzzFeed

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

The idea behind Shutterstock and BuzzFeed 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.