Correlation Between IQIYI and FubotvInc

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

By analyzing existing cross correlation between iQIYI Inc and FubotvInc, you can compare the effects of market volatilities on IQIYI and FubotvInc 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 IQIYI with a short position of FubotvInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and FubotvInc.

Diversification Opportunities for IQIYI and FubotvInc

-0.82

Correlation Coefficient

IQIYI  FubotvInc

Pay attention - limited upside

The 3 months correlation between IQIYI and FubotvInc is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and FubotvInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FubotvInc and IQIYI 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 iQIYI Inc are associated (or correlated) with FubotvInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FubotvInc has no effect on the direction of IQIYI i.e., IQIYI and FubotvInc go up and down completely randomly.

Pair Corralation between IQIYI and FubotvInc

Allowing for the 90-day total investment horizon iQIYI Inc is expected to generate 0.65 times more return on investment than FubotvInc. However, iQIYI Inc is 1.53 times less risky than FubotvInc. It trades about 0.23 of its potential returns per unit of risk. FubotvInc is currently generating about 0.0 per unit of risk. If you would invest  400.00  in iQIYI Inc on February 14, 2024 and sell it today you would earn a total of  114.00  from holding iQIYI Inc or generate 28.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iQIYI Inc  vs.  FubotvInc

iQIYI Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iQIYI Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IQIYI reported solid returns over the last few months and may actually be approaching a breakup point.

FubotvInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FubotvInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with IQIYI and FubotvInc

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

The idea behind iQIYI Inc and FubotvInc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.