Correlation Between Match and IAC
Can any of the company-specific risk be diversified away by investing in both Match and IAC 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 Match and IAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Match Group and IAC Inc, you can compare the effects of market volatilities on Match and IAC 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 Match with a short position of IAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Match and IAC.
Diversification Opportunities for Match and IAC
Poor diversification
The 3 months correlation between Match and IAC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Match Group and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc and Match 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 Match Group are associated (or correlated) with IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of Match i.e., Match and IAC go up and down completely randomly.
Pair Corralation between Match and IAC
Given the investment horizon of 90 days Match Group is expected to under-perform the IAC. In addition to that, Match is 1.24 times more volatile than IAC Inc. It trades about -0.11 of its total potential returns per unit of risk. IAC Inc is currently generating about -0.09 per unit of volatility. 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 |
Match Group vs. IAC Inc
Performance |
| Timeline |
| Match Group |
| IAC Inc |
Match and IAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Match and IAC
The main advantage of trading using opposite Match and IAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Match position performs unexpectedly, IAC 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 IAC will offset losses from the drop in IAC's long position.The idea behind Match Group and IAC 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.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |