Correlation Between IAC and TrueCar
Can any of the company-specific risk be diversified away by investing in both IAC and TrueCar 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 TrueCar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IAC Inc and TrueCar, you can compare the effects of market volatilities on IAC and TrueCar 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 TrueCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of IAC and TrueCar.
Diversification Opportunities for IAC and TrueCar
Very good diversification
The 3 months correlation between IAC and TrueCar is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding IAC Inc and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar 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 TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of IAC i.e., IAC and TrueCar go up and down completely randomly.
Pair Corralation between IAC and TrueCar
Considering the 90-day investment horizon IAC Inc is expected to under-perform the TrueCar. In addition to that, IAC is 1.0 times more volatile than TrueCar. It trades about -0.06 of its total potential returns per unit of risk. TrueCar is currently generating about 0.14 per unit of volatility. If you would invest 377.00 in TrueCar on August 28, 2024 and sell it today you would earn a total of 37.00 from holding TrueCar or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IAC Inc vs. TrueCar
Performance |
| Timeline |
| IAC Inc |
| TrueCar |
IAC and TrueCar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IAC and TrueCar
The main advantage of trading using opposite IAC and TrueCar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAC position performs unexpectedly, TrueCar 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 TrueCar will offset losses from the drop in TrueCar's long position.The idea behind IAC Inc and TrueCar 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |