Correlation Between Yelp and Perion Network

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

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

Diversification Opportunities for Yelp and Perion Network

0.11

Correlation Coefficient

Yelp  Perion Network

Average diversification

The 3 months correlation between Yelp and Perion is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Yelp Inc and Perion Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perion Network and Yelp 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 Yelp Inc are associated (or correlated) with Perion Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perion Network has no effect on the direction of Yelp i.e., Yelp and Perion Network go up and down completely randomly.

Pair Corralation between Yelp and Perion Network

Given the investment horizon of 90 days Yelp Inc is expected to generate 0.7 times more return on investment than Perion Network. However, Yelp Inc is 1.44 times less risky than Perion Network. It trades about 0.04 of its potential returns per unit of risk. Perion Network is currently generating about -0.01 per unit of risk. If you would invest  2,949  in Yelp Inc on February 7, 2024 and sell it today you would earn a total of  1,050  from holding Yelp Inc or generate 35.61% return on investment over 90 days.

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

Yelp Inc  vs.  Perion Network

Yelp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yelp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's essential indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Perion Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perion Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Yelp and Perion Network

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

The idea behind Yelp Inc and Perion Network 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.