Correlation Between Trump Media and Taboola

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

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

Diversification Opportunities for Trump Media and Taboola

0.64

Correlation Coefficient

Trump Media  Taboola

Poor diversification

The 3 months correlation between Trump and Taboola is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology and Taboola Ltd Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taboola Warrant and Trump Media 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 Trump Media Technology are associated (or correlated) with Taboola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taboola Warrant has no effect on the direction of Trump Media i.e., Trump Media and Taboola go up and down completely randomly.

Pair Corralation between Trump Media and Taboola

Considering the 90-day investment horizon Trump Media is expected to generate 1.39 times less return on investment than Taboola. But when comparing it to its historical volatility, Trump Media Technology is 1.48 times less risky than Taboola. It trades about 0.04 of its potential returns per unit of risk. Taboola Ltd Warrant is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Taboola Ltd Warrant on August 30, 2024 and sell it today you would lose (26.00) from holding Taboola Ltd Warrant or give up 59.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.68%
Values	Daily Returns

Trump Media Technology  vs.  Taboola Ltd Warrant

Trump Media Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trump Media Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward-looking indicators, Trump Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Taboola Warrant

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taboola Ltd Warrant are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Taboola showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trump Media and Taboola

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

The idea behind Trump Media Technology and Taboola Ltd Warrant 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.