Correlation Between Twilio and Shutterstock

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

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

Diversification Opportunities for Twilio and Shutterstock

-0.19

Correlation Coefficient

Twilio  Shutterstock

Good diversification

The 3 months correlation between Twilio and Shutterstock is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Twilio Inc and Shutterstock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shutterstock and Twilio 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 Twilio Inc are associated (or correlated) with Shutterstock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shutterstock has no effect on the direction of Twilio i.e., Twilio and Shutterstock go up and down completely randomly.

Pair Corralation between Twilio and Shutterstock

Given the investment horizon of 90 days Twilio Inc is expected to generate 0.87 times more return on investment than Shutterstock. However, Twilio Inc is 1.15 times less risky than Shutterstock. It trades about 0.15 of its potential returns per unit of risk. Shutterstock is currently generating about -0.06 per unit of risk. If you would invest  6,033  in Twilio Inc on September 20, 2024 and sell it today you would earn a total of  4,513  from holding Twilio Inc or generate 74.81% return on investment over 90 days.

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

Twilio Inc  vs.  Shutterstock

Twilio Inc

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Twilio Inc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Twilio displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Twilio and Shutterstock

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

The idea behind Twilio Inc and Shutterstock 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .