Correlation Between Vacasa and Bumble

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

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

Diversification Opportunities for Vacasa and Bumble

0.29

Correlation Coefficient

Vacasa  Bumble

Modest diversification

The 3 months correlation between Vacasa and Bumble is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vacasa Inc and Bumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumble Inc and Vacasa 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 Vacasa Inc are associated (or correlated) with Bumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumble Inc has no effect on the direction of Vacasa i.e., Vacasa and Bumble go up and down completely randomly.

Pair Corralation between Vacasa and Bumble

Given the investment horizon of 90 days Vacasa is expected to generate 1.04 times less return on investment than Bumble. In addition to that, Vacasa is 1.98 times more volatile than Bumble Inc. It trades about 0.08 of its total potential returns per unit of risk. Bumble Inc is currently generating about 0.17 per unit of volatility. If you would invest  619.00  in Bumble Inc on September 14, 2024 and sell it today you would earn a total of  209.00  from holding Bumble Inc or generate 33.76% return on investment over 90 days.

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

Vacasa Inc  vs.  Bumble Inc

Vacasa Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vacasa Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Vacasa sustained solid returns over the last few months and may actually be approaching a breakup point.

Bumble Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bumble Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental drivers, Bumble disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vacasa and Bumble

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

The idea behind Vacasa Inc and Bumble Inc 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.