Correlation Between IMedia Brands and Tautachrome

Can any of the company-specific risk be diversified away by investing in both IMedia Brands and Tautachrome 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 Tautachrome into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IMedia Brands and Tautachrome, you can compare the effects of market volatilities on IMedia Brands and Tautachrome 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 Tautachrome. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMedia Brands and Tautachrome.

Diversification Opportunities for IMedia Brands and Tautachrome

0.03

Correlation Coefficient

IMedia Brands  Tautachrome

Significant diversification

The 3 months correlation between IMedia and Tautachrome is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IMedia Brands and Tautachrome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tautachrome 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 Tautachrome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tautachrome has no effect on the direction of IMedia Brands i.e., IMedia Brands and Tautachrome go up and down completely randomly.

Pair Corralation between IMedia Brands and Tautachrome

Given the investment horizon of 90 days IMedia Brands is expected to under-perform the Tautachrome. But the stock apears to be less risky and, when comparing its historical volatility, IMedia Brands is 1.37 times less risky than Tautachrome. The stock trades about -0.08 of its potential returns per unit of risk. The Tautachrome is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.17  in Tautachrome on February 11, 2024 and sell it today you would lose (0.16) from holding Tautachrome or give up 94.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.06%
Values	Daily Returns

IMedia Brands  vs.  Tautachrome

IMedia Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IMedia Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, IMedia Brands is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Tautachrome

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tautachrome are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Tautachrome displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IMedia Brands and Tautachrome

The main advantage of trading using opposite IMedia Brands and Tautachrome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMedia Brands position performs unexpectedly, Tautachrome 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 Tautachrome will offset losses from the drop in Tautachrome's long position.

The idea behind IMedia Brands and Tautachrome 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.