Correlation Between Match and Data Storage

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Can any of the company-specific risk be diversified away by investing in both Match and Data Storage 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 Data Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Match Group and Data Storage Corp, you can compare the effects of market volatilities on Match and Data Storage 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 Data Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Match and Data Storage.

Diversification Opportunities for Match and Data Storage

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Match and Data is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Match Group and Data Storage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Storage Corp 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 Data Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Storage Corp has no effect on the direction of Match i.e., Match and Data Storage go up and down completely randomly.

Pair Corralation between Match and Data Storage

Given the investment horizon of 90 days Match Group is expected to under-perform the Data Storage. But the stock apears to be less risky and, when comparing its historical volatility, Match Group is 4.67 times less risky than Data Storage. The stock trades about -0.1 of its potential returns per unit of risk. The Data Storage Corp is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  420.00  in Data Storage Corp on December 29, 2023 and sell it today you would earn a total of  344.00  from holding Data Storage Corp or generate 81.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Match Group  vs.  Data Storage Corp

 Performance 
       Timeline  
Match Group 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Match Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Match is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
Data Storage Corp 

Risk-Adjusted Performance

23 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Data Storage Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Data Storage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Match and Data Storage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Match and Data Storage

The main advantage of trading using opposite Match and Data Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Match position performs unexpectedly, Data Storage 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 Data Storage will offset losses from the drop in Data Storage's long position.
The idea behind Match Group and Data Storage Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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