Correlation Between Eventbrite and S A P

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

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

Diversification Opportunities for Eventbrite and S A P

0.71

Correlation Coefficient

Eventbrite  S A P

Poor diversification

The 3 months correlation between Eventbrite and SAP is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eventbrite Class A and SAP SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE ADR and Eventbrite 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 Eventbrite Class A are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE ADR has no effect on the direction of Eventbrite i.e., Eventbrite and S A P go up and down completely randomly.

Pair Corralation between Eventbrite and S A P

Allowing for the 90-day total investment horizon Eventbrite Class A is expected to generate 2.25 times more return on investment than S A P. However, Eventbrite is 2.25 times more volatile than SAP SE ADR. It trades about 0.1 of its potential returns per unit of risk. SAP SE ADR is currently generating about 0.09 per unit of risk. If you would invest  282.00  in Eventbrite Class A on September 24, 2024 and sell it today you would earn a total of  54.00  from holding Eventbrite Class A or generate 19.15% return on investment over 90 days.

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

Eventbrite Class A  vs.  SAP SE ADR

Eventbrite Class A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eventbrite Class A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Eventbrite sustained solid returns over the last few months and may actually be approaching a breakup point.

SAP SE ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eventbrite and S A P

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

The idea behind Eventbrite Class A and SAP SE ADR 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.