Correlation Between Sirius and Pinterest

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

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

Diversification Opportunities for Sirius and Pinterest

0.16

Correlation Coefficient

Sirius  Pinterest

Average diversification

The 3 months correlation between Sirius and Pinterest is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sirius XM Holdings and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and Sirius 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 Sirius XM Holdings are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Sirius i.e., Sirius and Pinterest go up and down completely randomly.

Pair Corralation between Sirius and Pinterest

Assuming the 90 days trading horizon Sirius is expected to generate 92.43 times less return on investment than Pinterest. But when comparing it to its historical volatility, Sirius XM Holdings is 6.03 times less risky than Pinterest. It trades about 0.0 of its potential returns per unit of risk. Pinterest is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,669  in Pinterest on October 13, 2024 and sell it today you would earn a total of  397.00  from holding Pinterest or generate 14.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Sirius XM Holdings  vs.  Pinterest

Sirius XM Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sirius is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sirius and Pinterest

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

The idea behind Sirius XM Holdings and Pinterest 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.