Correlation Between IMedia Brands and SIGNA Sports
Can any of the company-specific risk be diversified away by investing in both IMedia Brands and SIGNA Sports 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 IMedia Brands and SIGNA Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMedia Brands and SIGNA Sports United, you can compare the effects of market volatilities on IMedia Brands and SIGNA Sports 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 IMedia Brands with a short position of SIGNA Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMedia Brands and SIGNA Sports.
Diversification Opportunities for IMedia Brands and SIGNA Sports
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IMedia and SIGNA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding IMedia Brands and SIGNA Sports United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGNA Sports United and IMedia Brands 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 IMedia Brands are associated (or correlated) with SIGNA Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGNA Sports United has no effect on the direction of IMedia Brands i.e., IMedia Brands and SIGNA Sports go up and down completely randomly.
Pair Corralation between IMedia Brands and SIGNA Sports
Given the investment horizon of 90 days IMedia Brands is expected to under-perform the SIGNA Sports. In addition to that, IMedia Brands is 3.03 times more volatile than SIGNA Sports United. It trades about -0.29 of its total potential returns per unit of risk. SIGNA Sports United is currently generating about -0.04 per unit of volatility. If you would invest 305.00 in SIGNA Sports United on August 31, 2024 and sell it today you would lose (32.00) from holding SIGNA Sports United or give up 10.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.88% |
| Values | Daily Returns |
IMedia Brands vs. SIGNA Sports United
Performance |
| Timeline |
| IMedia Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SIGNA Sports United |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IMedia Brands and SIGNA Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMedia Brands and SIGNA Sports
The main advantage of trading using opposite IMedia Brands and SIGNA Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMedia Brands position performs unexpectedly, SIGNA Sports 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 SIGNA Sports will offset losses from the drop in SIGNA Sports' long position.The idea behind IMedia Brands and SIGNA Sports United 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.| SIGNA Sports vs. Sally Beauty Holdings | SIGNA Sports vs. National Vision Holdings | SIGNA Sports vs. MarineMax | SIGNA Sports vs. Caseys General Stores |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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