Correlation Between IDT and Ooma
Can any of the company-specific risk be diversified away by investing in both IDT and Ooma 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 IDT and Ooma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDT Corporation and Ooma Inc, you can compare the effects of market volatilities on IDT and Ooma 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 IDT with a short position of Ooma. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDT and Ooma.
Diversification Opportunities for IDT and Ooma
Very poor diversification
The 3 months correlation between IDT and Ooma is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding IDT Corp. and Ooma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ooma Inc and IDT 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 IDT Corporation are associated (or correlated) with Ooma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ooma Inc has no effect on the direction of IDT i.e., IDT and Ooma go up and down completely randomly.
Pair Corralation between IDT and Ooma
Considering the 90-day investment horizon IDT is expected to generate 1.49 times less return on investment than Ooma. But when comparing it to its historical volatility, IDT Corporation is 1.13 times less risky than Ooma. It trades about 0.28 of its potential returns per unit of risk. Ooma Inc is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,210 in Ooma Inc on August 26, 2024 and sell it today you would earn a total of 211.00 from holding Ooma Inc or generate 17.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDT Corp. vs. Ooma Inc
Performance |
| Timeline |
| IDT Corporation |
| Ooma Inc |
IDT and Ooma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDT and Ooma
The main advantage of trading using opposite IDT and Ooma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDT position performs unexpectedly, Ooma 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 Ooma will offset losses from the drop in Ooma's long position.The idea behind IDT Corporation and Ooma Inc 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.| Ooma vs. Shenandoah Telecommunications Co | Ooma vs. Anterix | Ooma vs. Liberty Broadband Corp | Ooma vs. IDT Corporation |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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