Correlation Between Activision Blizzard and Doubledown InteractiveCo

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

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

Diversification Opportunities for Activision Blizzard and Doubledown InteractiveCo

-0.02

Correlation Coefficient

Activision Blizzard  Doubledown InteractiveCo

Good diversification

The 3 months correlation between Activision and Doubledown is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Activision Blizzard and Doubledown InteractiveCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubledown InteractiveCo and Activision Blizzard 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 Activision Blizzard are associated (or correlated) with Doubledown InteractiveCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubledown InteractiveCo has no effect on the direction of Activision Blizzard i.e., Activision Blizzard and Doubledown InteractiveCo go up and down completely randomly.

Pair Corralation between Activision Blizzard and Doubledown InteractiveCo

Given the investment horizon of 90 days Activision Blizzard is expected to generate 0.31 times more return on investment than Doubledown InteractiveCo. However, Activision Blizzard is 3.21 times less risky than Doubledown InteractiveCo. It trades about 0.18 of its potential returns per unit of risk. Doubledown InteractiveCo is currently generating about 0.04 per unit of risk. If you would invest  7,698  in Activision Blizzard on January 19, 2024 and sell it today you would earn a total of  1,744  from holding Activision Blizzard or generate 22.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	44.05%
Values	Daily Returns

Activision Blizzard  vs.  Doubledown InteractiveCo

Activision Blizzard

Risk-Adjusted Performance

0 of 100

Very Weak

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

Doubledown InteractiveCo

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Doubledown InteractiveCo are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental indicators, Doubledown InteractiveCo demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Activision Blizzard and Doubledown InteractiveCo

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

The idea behind Activision Blizzard and Doubledown InteractiveCo 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.