Correlation Between Outbrain and Trump Media

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

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

Diversification Opportunities for Outbrain and Trump Media

0.13

Correlation Coefficient

Outbrain  Trump Media

Average diversification

The 3 months correlation between Outbrain and Trump is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Outbrain and Trump Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trump Media Technology and Outbrain 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 Outbrain are associated (or correlated) with Trump Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trump Media Technology has no effect on the direction of Outbrain i.e., Outbrain and Trump Media go up and down completely randomly.

Pair Corralation between Outbrain and Trump Media

Allowing for the 90-day total investment horizon Outbrain is expected to generate 3.11 times less return on investment than Trump Media. But when comparing it to its historical volatility, Outbrain is 3.89 times less risky than Trump Media. It trades about 0.22 of its potential returns per unit of risk. Trump Media Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,076  in Trump Media Technology on September 12, 2024 and sell it today you would earn a total of  1,407  from holding Trump Media Technology or generate 130.76% return on investment over 90 days.

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

Outbrain  vs.  Trump Media Technology

Outbrain

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Outbrain are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Outbrain sustained solid returns over the last few months and may actually be approaching a breakup point.

Trump Media Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trump Media Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Trump Media showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Outbrain and Trump Media

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

The idea behind Outbrain and Trump Media 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.