Correlation Between IAC and Opera
Can any of the company-specific risk be diversified away by investing in both IAC and Opera 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 Opera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAC Inc and Opera, you can compare the effects of market volatilities on IAC and Opera 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 Opera. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAC and Opera.
Diversification Opportunities for IAC and Opera
Very good diversification
The 3 months correlation between IAC and Opera is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding IAC Inc and Opera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opera 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 Opera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opera has no effect on the direction of IAC i.e., IAC and Opera go up and down completely randomly.
Pair Corralation between IAC and Opera
Considering the 90-day investment horizon IAC Inc is expected to under-perform the Opera. In addition to that, IAC is 1.14 times more volatile than Opera. It trades about -0.07 of its total potential returns per unit of risk. Opera is currently generating about 0.33 per unit of volatility. If you would invest 1,613 in Opera on August 25, 2024 and sell it today you would earn a total of 406.00 from holding Opera or generate 25.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
IAC Inc vs. Opera
Performance |
| Timeline |
| IAC Inc |
| Opera |
IAC and Opera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAC and Opera
The main advantage of trading using opposite IAC and Opera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAC position performs unexpectedly, Opera 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 Opera will offset losses from the drop in Opera's long position.The idea behind IAC Inc and Opera 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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