Correlation Between IAC and Match
Can any of the company-specific risk be diversified away by investing in both IAC and Match 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 IAC and Match into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAC Inc and Match Group, you can compare the effects of market volatilities on IAC and Match 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 IAC with a short position of Match. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAC and Match.
Diversification Opportunities for IAC and Match
Poor diversification
The 3 months correlation between IAC and Match is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding IAC Inc and Match Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Match Group and IAC 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 IAC Inc are associated (or correlated) with Match. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Match Group has no effect on the direction of IAC i.e., IAC and Match go up and down completely randomly.
Pair Corralation between IAC and Match
Considering the 90-day investment horizon IAC Inc is expected to generate 0.8 times more return on investment than Match. However, IAC Inc is 1.24 times less risky than Match. It trades about -0.09 of its potential returns per unit of risk. Match Group is currently generating about -0.11 per unit of risk. If you would invest 5,136 in IAC Inc on August 30, 2024 and sell it today you would lose (433.00) from holding IAC Inc or give up 8.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAC Inc vs. Match Group
Performance |
| Timeline |
| IAC Inc |
| Match Group |
IAC and Match Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAC and Match
The main advantage of trading using opposite IAC and Match positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAC position performs unexpectedly, Match 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 Match will offset losses from the drop in Match's long position.The idea behind IAC Inc and Match Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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