Correlation Between Paysafe and Trupanion

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

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

Diversification Opportunities for Paysafe and Trupanion

-0.2

Correlation Coefficient

Paysafe  Trupanion

Good diversification

The 3 months correlation between Paysafe and Trupanion is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion and Paysafe 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 Paysafe are associated (or correlated) with Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of Paysafe i.e., Paysafe and Trupanion go up and down completely randomly.

Pair Corralation between Paysafe and Trupanion

Given the investment horizon of 90 days Paysafe is expected to under-perform the Trupanion. In addition to that, Paysafe is 1.33 times more volatile than Trupanion. It trades about -0.08 of its total potential returns per unit of risk. Trupanion is currently generating about 0.1 per unit of volatility. If you would invest  4,198  in Trupanion on September 30, 2024 and sell it today you would earn a total of  775.00  from holding Trupanion or generate 18.46% return on investment over 90 days.

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

Paysafe  vs.  Trupanion

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Trupanion

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trupanion are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Trupanion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paysafe and Trupanion

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

The idea behind Paysafe and Trupanion 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.