Correlation Between Independence Contract and Groupon

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

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

Diversification Opportunities for Independence Contract and Groupon

0.46

Correlation Coefficient

Independence Contract Groupon

Very weak diversification

The 3 months correlation between Independence and Groupon is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Independence Contract Drilling and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon and Independence Contract 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 Independence Contract Drilling are associated (or correlated) with Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Independence Contract i.e., Independence Contract and Groupon go up and down completely randomly.

Pair Corralation between Independence Contract and Groupon

Considering the 90-day investment horizon Independence Contract Drilling is expected to generate 1.03 times more return on investment than Groupon. However, Independence Contract is 1.03 times more volatile than Groupon. It trades about -0.13 of its potential returns per unit of risk. Groupon is currently generating about -0.58 per unit of risk. If you would invest  351.00  in Independence Contract Drilling on December 21, 2022 and sell it today you would lose (47.00)  from holding Independence Contract Drilling or give up 13.39% of portfolio value over 90 days.

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

Independence Contract Drilling  vs.  Groupon

Independence Contract

Independence Performance

2 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Independence Contract Drilling are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Independence Contract may actually be approaching a critical reversion point that can send shares even higher in April 2023.

Groupon

Groupon Performance

0 of 100

Over the last 90 days Groupon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2023. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Pair Trading with Independence Contract and Groupon

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

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The idea behind Independence Contract Drilling and Groupon 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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Check out your portfolio center. 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.