Correlation Between Shutterstock and Yelp

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

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

Diversification Opportunities for Shutterstock and Yelp

-0.22

Correlation Coefficient

Shutterstock  Yelp

Very good diversification

The 3 months correlation between Shutterstock and Yelp is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Shutterstock and Yelp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yelp Inc 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 Yelp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yelp Inc has no effect on the direction of Shutterstock i.e., Shutterstock and Yelp go up and down completely randomly.

Pair Corralation between Shutterstock and Yelp

Given the investment horizon of 90 days Shutterstock is expected to under-perform the Yelp. In addition to that, Shutterstock is 1.6 times more volatile than Yelp Inc. It trades about -0.06 of its total potential returns per unit of risk. Yelp Inc is currently generating about 0.07 per unit of volatility. If you would invest  3,493  in Yelp Inc on August 30, 2024 and sell it today you would earn a total of  233.00  from holding Yelp Inc or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Shutterstock  vs.  Yelp Inc

Shutterstock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shutterstock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Yelp Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yelp Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Yelp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Shutterstock and Yelp

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

The idea behind Shutterstock and Yelp 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.