Correlation Between Shutterstock and TrueCar

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

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

Diversification Opportunities for Shutterstock and TrueCar

0.96

Correlation Coefficient

Shutterstock  TrueCar

Almost no diversification

The 3 months correlation between Shutterstock and TrueCar is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Shutterstock and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar 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 TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of Shutterstock i.e., Shutterstock and TrueCar go up and down completely randomly.

Pair Corralation between Shutterstock and TrueCar

Given the investment horizon of 90 days Shutterstock is expected to generate 0.9 times more return on investment than TrueCar. However, Shutterstock is 1.11 times less risky than TrueCar. It trades about -0.22 of its potential returns per unit of risk. TrueCar is currently generating about -0.33 per unit of risk. If you would invest  2,996  in Shutterstock on December 30, 2024 and sell it today you would lose (1,217) from holding Shutterstock or give up 40.62% of portfolio value over 90 days.

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

Shutterstock  vs.  TrueCar

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

TrueCar

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueCar 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 basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Shutterstock and TrueCar

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

The idea behind Shutterstock and TrueCar 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.