Correlation Between Yelp and Shutterstock

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

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

Diversification Opportunities for Yelp and Shutterstock

0.82

Correlation Coefficient

Yelp  Shutterstock

Very poor diversification

The 3 months correlation between Yelp and Shutterstock is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Yelp Inc and Shutterstock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shutterstock and Yelp 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 Yelp 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 Yelp i.e., Yelp and Shutterstock go up and down completely randomly.

Pair Corralation between Yelp and Shutterstock

Given the investment horizon of 90 days Yelp Inc is expected to generate 0.55 times more return on investment than Shutterstock. However, Yelp Inc is 1.83 times less risky than Shutterstock. It trades about -0.02 of its potential returns per unit of risk. Shutterstock is currently generating about -0.22 per unit of risk. If you would invest  3,859  in Yelp Inc on December 30, 2024 and sell it today you would lose (138.00) from holding Yelp Inc or give up 3.58% of portfolio value over 90 days.

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

Yelp Inc  vs.  Shutterstock

Yelp Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yelp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Yelp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Shutterstock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shutterstock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Yelp and Shutterstock

The main advantage of trading using opposite Yelp and Shutterstock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yelp 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 Yelp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.