Correlation Between EverQuote and Outbrain

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

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

Diversification Opportunities for EverQuote and Outbrain

0.37

Correlation Coefficient

EverQuote  Outbrain

Weak diversification

The 3 months correlation between EverQuote and Outbrain is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding EverQuote Class A and Outbrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outbrain and EverQuote 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 EverQuote Class A are associated (or correlated) with Outbrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outbrain has no effect on the direction of EverQuote i.e., EverQuote and Outbrain go up and down completely randomly.

Pair Corralation between EverQuote and Outbrain

Given the investment horizon of 90 days EverQuote is expected to generate 2.27 times less return on investment than Outbrain. In addition to that, EverQuote is 1.75 times more volatile than Outbrain. It trades about 0.09 of its total potential returns per unit of risk. Outbrain is currently generating about 0.37 per unit of volatility. If you would invest  432.00  in Outbrain on August 30, 2024 and sell it today you would earn a total of  114.00  from holding Outbrain or generate 26.39% return on investment over 90 days.

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

EverQuote Class A  vs.  Outbrain

EverQuote Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EverQuote Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Outbrain

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Outbrain may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with EverQuote and Outbrain

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

The idea behind EverQuote Class A and Outbrain 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.