Correlation Between Marchex and Impact Fusion

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

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

Diversification Opportunities for Marchex and Impact Fusion

-0.25

Correlation Coefficient

Marchex  Impact Fusion

Very good diversification

The 3 months correlation between Marchex and Impact is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Impact Fusion International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Fusion Intern and Marchex 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 Marchex are associated (or correlated) with Impact Fusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Fusion Intern has no effect on the direction of Marchex i.e., Marchex and Impact Fusion go up and down completely randomly.

Pair Corralation between Marchex and Impact Fusion

Given the investment horizon of 90 days Marchex is expected to generate 1.16 times more return on investment than Impact Fusion. However, Marchex is 1.16 times more volatile than Impact Fusion International. It trades about 0.11 of its potential returns per unit of risk. Impact Fusion International is currently generating about -0.02 per unit of risk. If you would invest  133.00  in Marchex on March 13, 2024 and sell it today you would earn a total of  29.00  from holding Marchex or generate 21.8% return on investment over 90 days.

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

Marchex  vs.  Impact Fusion International

Marchex

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Impact Fusion Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Fusion International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Impact Fusion is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Marchex and Impact Fusion

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

The idea behind Marchex and Impact Fusion International 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.