Correlation Between Trade Desk and HubSpot

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

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

Diversification Opportunities for Trade Desk and HubSpot

0.47

Correlation Coefficient

Trade Desk  HubSpot

Very weak diversification

The 3 months correlation between Trade and HubSpot is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Trade Desk and HubSpot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HubSpot 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 Trade Desk are associated (or correlated) with HubSpot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HubSpot has no effect on the direction of Trade Desk i.e., Trade Desk and HubSpot go up and down completely randomly.

Pair Corralation between Trade Desk and HubSpot

Considering the 90-day investment horizon Trade Desk is expected to under-perform the HubSpot. In addition to that, Trade Desk is 2.1 times more volatile than HubSpot. It trades about -0.21 of its total potential returns per unit of risk. HubSpot is currently generating about -0.11 per unit of volatility. If you would invest  69,951  in HubSpot on December 28, 2024 and sell it today you would lose (11,740) from holding HubSpot or give up 16.78% of portfolio value over 90 days.

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

Trade Desk  vs.  HubSpot

Trade Desk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trade Desk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting 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.

HubSpot

Risk-Adjusted Performance

Very Weak

Over the last 90 days HubSpot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers 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 Trade Desk and HubSpot

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

The idea behind Trade Desk and HubSpot 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.