Correlation Between Doubledown InteractiveCo and Activision Blizzard

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

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

Diversification Opportunities for Doubledown InteractiveCo and Activision Blizzard

-0.09

Correlation Coefficient

Doubledown InteractiveCo  Activision Blizzard

Good diversification

The 3 months correlation between Doubledown and Activision is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Doubledown InteractiveCo and Activision Blizzard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Activision Blizzard and Doubledown InteractiveCo 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 Doubledown InteractiveCo are associated (or correlated) with Activision Blizzard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Activision Blizzard has no effect on the direction of Doubledown InteractiveCo i.e., Doubledown InteractiveCo and Activision Blizzard go up and down completely randomly.

Pair Corralation between Doubledown InteractiveCo and Activision Blizzard

If you would invest  9,442  in Activision Blizzard on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Activision Blizzard or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Doubledown InteractiveCo  vs.  Activision Blizzard

Doubledown InteractiveCo

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Doubledown InteractiveCo are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Doubledown InteractiveCo demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Doubledown InteractiveCo and Activision Blizzard

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

The idea behind Doubledown InteractiveCo and Activision Blizzard 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.