Correlation Between IAA and DSS

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

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

Diversification Opportunities for IAA and DSS

-0.09

Correlation Coefficient

IAA  DSS

Good diversification

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

Pair Corralation between IAA and DSS

If you would invest  3,989  in IAA Inc on January 19, 2024 and sell it today you would earn a total of  0.00  from holding IAA Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

IAA Inc  vs.  DSS Inc

IAA Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IAA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

DSS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with IAA and DSS

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

The idea behind IAA Inc and DSS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .