Correlation Between Shutterstock and Trivago NV

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

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

Diversification Opportunities for Shutterstock and Trivago NV

0.42

Correlation Coefficient

Shutterstock  Trivago NV

Very weak diversification

The 3 months correlation between Shutterstock and Trivago is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shutterstock and Trivago NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trivago NV and Shutterstock 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 Shutterstock are associated (or correlated) with Trivago NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trivago NV has no effect on the direction of Shutterstock i.e., Shutterstock and Trivago NV go up and down completely randomly.

Pair Corralation between Shutterstock and Trivago NV

Given the investment horizon of 90 days Shutterstock is expected to generate 13.63 times less return on investment than Trivago NV. But when comparing it to its historical volatility, Shutterstock is 1.91 times less risky than Trivago NV. It trades about 0.06 of its potential returns per unit of risk. Trivago NV is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  168.00  in Trivago NV on September 4, 2024 and sell it today you would earn a total of  85.00  from holding Trivago NV or generate 50.6% return on investment over 90 days.

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

Shutterstock  vs.  Trivago NV

Shutterstock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shutterstock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Shutterstock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Trivago NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trivago NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Trivago NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shutterstock and Trivago NV

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

The idea behind Shutterstock and Trivago NV 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.