Correlation Between Bumble and PAR Technology

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

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

Diversification Opportunities for Bumble and PAR Technology

0.93

Correlation Coefficient

Bumble  PAR Technology

Almost no diversification

The 3 months correlation between Bumble and PAR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bumble Inc and PAR Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAR Technology and Bumble 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 Bumble Inc are associated (or correlated) with PAR Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAR Technology has no effect on the direction of Bumble i.e., Bumble and PAR Technology go up and down completely randomly.

Pair Corralation between Bumble and PAR Technology

Given the investment horizon of 90 days Bumble Inc is expected to under-perform the PAR Technology. In addition to that, Bumble is 1.54 times more volatile than PAR Technology. It trades about -0.2 of its total potential returns per unit of risk. PAR Technology is currently generating about -0.09 per unit of volatility. If you would invest  7,833  in PAR Technology on September 25, 2024 and sell it today you would lose (322.00) from holding PAR Technology or give up 4.11% of portfolio value over 90 days.

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

Bumble Inc  vs.  PAR Technology

Bumble Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bumble Inc are ranked lower than 10 (%) 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.

PAR Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PAR Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, PAR Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bumble and PAR Technology

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

The idea behind Bumble Inc and PAR Technology 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 Stocks Directory module to find actively traded stocks across global markets.