Correlation Between Pinterest and Scholastic

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

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

Diversification Opportunities for Pinterest and Scholastic

-0.16

Correlation Coefficient

Pinterest  Scholastic

Good diversification

The 3 months correlation between Pinterest and Scholastic is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Scholastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholastic and Pinterest 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 Pinterest are associated (or correlated) with Scholastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholastic has no effect on the direction of Pinterest i.e., Pinterest and Scholastic go up and down completely randomly.

Pair Corralation between Pinterest and Scholastic

Given the investment horizon of 90 days Pinterest is expected to generate 0.92 times more return on investment than Scholastic. However, Pinterest is 1.09 times less risky than Scholastic. It trades about 0.04 of its potential returns per unit of risk. Scholastic is currently generating about -0.1 per unit of risk. If you would invest  2,936  in Pinterest on September 17, 2024 and sell it today you would earn a total of  129.00  from holding Pinterest or generate 4.39% return on investment over 90 days.

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

Pinterest  vs.  Scholastic

Pinterest

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Pinterest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Scholastic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pinterest and Scholastic

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

The idea behind Pinterest and Scholastic 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.