Correlation Between Trupanion and Green Dot

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

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

Diversification Opportunities for Trupanion and Green Dot

0.78

Correlation Coefficient

Trupanion  Green Dot

Poor diversification

The 3 months correlation between Trupanion and Green is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Trupanion and Green Dot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Dot and Trupanion 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 Trupanion are associated (or correlated) with Green Dot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Dot has no effect on the direction of Trupanion i.e., Trupanion and Green Dot go up and down completely randomly.

Pair Corralation between Trupanion and Green Dot

Given the investment horizon of 90 days Trupanion is expected to generate 1.46 times more return on investment than Green Dot. However, Trupanion is 1.46 times more volatile than Green Dot. It trades about 0.04 of its potential returns per unit of risk. Green Dot is currently generating about 0.0 per unit of risk. If you would invest  2,927  in Trupanion on December 2, 2024 and sell it today you would earn a total of  527.00  from holding Trupanion or generate 18.0% return on investment over 90 days.

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

Trupanion  vs.  Green Dot

Trupanion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trupanion 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.

Green Dot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green Dot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Trupanion and Green Dot

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

The idea behind Trupanion and Green Dot 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.