Correlation Between 1StdibsCom and IPower

Can any of the company-specific risk be diversified away by investing in both 1StdibsCom and IPower 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 1StdibsCom and IPower into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1StdibsCom and iPower Inc, you can compare the effects of market volatilities on 1StdibsCom and IPower 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 1StdibsCom with a short position of IPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1StdibsCom and IPower.

Diversification Opportunities for 1StdibsCom and IPower

-0.25

Correlation Coefficient

1StdibsCom  IPower

Very good diversification

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

Pair Corralation between 1StdibsCom and IPower

Given the investment horizon of 90 days 1StdibsCom is expected to generate 0.35 times more return on investment than IPower. However, 1StdibsCom is 2.85 times less risky than IPower. It trades about -0.21 of its potential returns per unit of risk. iPower Inc is currently generating about -0.19 per unit of risk. If you would invest  599.00  in 1StdibsCom on January 20, 2024 and sell it today you would lose (67.00) from holding 1StdibsCom or give up 11.19% of portfolio value over 90 days.

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

1StdibsCom  vs.  iPower Inc

1StdibsCom

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 1StdibsCom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental drivers, 1StdibsCom may actually be approaching a critical reversion point that can send shares even higher in May 2024.

iPower Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iPower Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with 1StdibsCom and IPower

The main advantage of trading using opposite 1StdibsCom and IPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom position performs unexpectedly, IPower 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 IPower will offset losses from the drop in IPower's long position.

The idea behind 1StdibsCom and iPower Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..