Correlation Between Trade Desk and STORE ELECTRONIC

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

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

Diversification Opportunities for Trade Desk and STORE ELECTRONIC

-0.62

Correlation Coefficient

Trade Desk  STORE ELECTRONIC

Excellent diversification

The 3 months correlation between Trade and STORE is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC and Trade Desk 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 The Trade Desk are associated (or correlated) with STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of Trade Desk i.e., Trade Desk and STORE ELECTRONIC go up and down completely randomly.

Pair Corralation between Trade Desk and STORE ELECTRONIC

Assuming the 90 days horizon The Trade Desk is expected to generate 0.94 times more return on investment than STORE ELECTRONIC. However, The Trade Desk is 1.07 times less risky than STORE ELECTRONIC. It trades about 0.13 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.04 per unit of risk. If you would invest  9,759  in The Trade Desk on September 26, 2024 and sell it today you would earn a total of  1,917  from holding The Trade Desk or generate 19.64% return on investment over 90 days.

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

The Trade Desk  vs.  STORE ELECTRONIC

Trade Desk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Trade Desk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Trade Desk reported solid returns over the last few months and may actually be approaching a breakup point.

STORE ELECTRONIC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STORE ELECTRONIC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, STORE ELECTRONIC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Trade Desk and STORE ELECTRONIC

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

The idea behind The Trade Desk and STORE ELECTRONIC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.