Correlation Between Ooma and IHS Holding
Can any of the company-specific risk be diversified away by investing in both Ooma and IHS Holding 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 Ooma and IHS Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ooma Inc and IHS Holding, you can compare the effects of market volatilities on Ooma and IHS Holding 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 Ooma with a short position of IHS Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ooma and IHS Holding.
Diversification Opportunities for Ooma and IHS Holding
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ooma and IHS is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ooma Inc and IHS Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHS Holding and Ooma 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 Ooma Inc are associated (or correlated) with IHS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHS Holding has no effect on the direction of Ooma i.e., Ooma and IHS Holding go up and down completely randomly.
Pair Corralation between Ooma and IHS Holding
Given the investment horizon of 90 days Ooma Inc is expected to generate 0.65 times more return on investment than IHS Holding. However, Ooma Inc is 1.55 times less risky than IHS Holding. It trades about 0.37 of its potential returns per unit of risk. IHS Holding is currently generating about 0.12 per unit of risk. If you would invest 1,232 in Ooma Inc on August 27, 2024 and sell it today you would earn a total of 208.00 from holding Ooma Inc or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ooma Inc vs. IHS Holding
Performance |
| Timeline |
| Ooma Inc |
| IHS Holding |
Ooma and IHS Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ooma and IHS Holding
The main advantage of trading using opposite Ooma and IHS Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ooma position performs unexpectedly, IHS Holding 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 IHS Holding will offset losses from the drop in IHS Holding's long position.| Ooma vs. Shenandoah Telecommunications Co | Ooma vs. Anterix | Ooma vs. Liberty Broadband Corp | Ooma vs. IDT Corporation |
| IHS Holding vs. Cogent Communications Group | IHS Holding vs. IDT Corporation | IHS Holding vs. Iridium Communications | IHS Holding vs. Cable One |
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 Stocks Directory module to find actively traded stocks across global markets.
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