Correlation Between Taboola and Groupon

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

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

Diversification Opportunities for Taboola and Groupon

0.75

Correlation Coefficient

Taboola  Groupon

Poor diversification

The 3 months correlation between Taboola and Groupon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Taboola Ltd Warrant and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Taboola 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 Taboola Ltd Warrant are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Taboola i.e., Taboola and Groupon go up and down completely randomly.

Pair Corralation between Taboola and Groupon

Assuming the 90 days horizon Taboola Ltd Warrant is expected to generate 2.12 times more return on investment than Groupon. However, Taboola is 2.12 times more volatile than Groupon. It trades about 0.08 of its potential returns per unit of risk. Groupon is currently generating about 0.03 per unit of risk. If you would invest  30.00  in Taboola Ltd Warrant on February 7, 2024 and sell it today you would earn a total of  2.00  from holding Taboola Ltd Warrant or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Taboola Ltd Warrant  vs.  Groupon

Taboola Warrant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taboola Ltd Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taboola is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Groupon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Taboola and Groupon

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

The idea behind Taboola Ltd Warrant and Groupon 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.