Correlation Between Polished and IMedia Brands
Can any of the company-specific risk be diversified away by investing in both Polished and IMedia Brands 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 Polished and IMedia Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polished and IMedia Brands, you can compare the effects of market volatilities on Polished and IMedia Brands 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 Polished with a short position of IMedia Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polished and IMedia Brands.
Diversification Opportunities for Polished and IMedia Brands
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polished and IMedia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Polished and IMedia Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMedia Brands and Polished 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 Polished are associated (or correlated) with IMedia Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMedia Brands has no effect on the direction of Polished i.e., Polished and IMedia Brands go up and down completely randomly.
Pair Corralation between Polished and IMedia Brands
Considering the 90-day investment horizon Polished is expected to generate 0.31 times more return on investment than IMedia Brands. However, Polished is 3.28 times less risky than IMedia Brands. It trades about 0.07 of its potential returns per unit of risk. IMedia Brands is currently generating about -0.29 per unit of risk. If you would invest 50.00 in Polished on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Polished or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.88% |
| Values | Daily Returns |
Polished vs. IMedia Brands
Performance |
| Timeline |
| Polished |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IMedia Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Polished and IMedia Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polished and IMedia Brands
The main advantage of trading using opposite Polished and IMedia Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polished position performs unexpectedly, IMedia Brands 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 IMedia Brands will offset losses from the drop in IMedia Brands' long position.| Polished vs. Sally Beauty Holdings | Polished vs. National Vision Holdings | Polished vs. Big 5 Sporting | Polished vs. Pet Acquisition LLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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