Correlation Between Integrated Media and Activision Blizzard

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

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

Diversification Opportunities for Integrated Media and Activision Blizzard

-0.83

Correlation Coefficient

Integrated Media  Activision Blizzard

Pay attention - limited upside

The 3 months correlation between Integrated and Activision is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Media Technology and Activision Blizzard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Activision Blizzard and Integrated Media 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 Integrated Media Technology 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 Integrated Media i.e., Integrated Media and Activision Blizzard go up and down completely randomly.

Pair Corralation between Integrated Media and Activision Blizzard

Given the investment horizon of 90 days Integrated Media Technology is expected to under-perform the Activision Blizzard. In addition to that, Integrated Media is 5.35 times more volatile than Activision Blizzard. It trades about -0.02 of its total potential returns per unit of risk. Activision Blizzard is currently generating about 0.16 per unit of volatility. If you would invest  7,660  in Activision Blizzard on January 26, 2024 and sell it today you would earn a total of  1,782  from holding Activision Blizzard or generate 23.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	47.18%
Values	Daily Returns

Integrated Media Technology  vs.  Activision Blizzard

Integrated Media Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Media Technology 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 Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 Integrated Media and Activision Blizzard

The main advantage of trading using opposite Integrated Media and Activision Blizzard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Media 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 Integrated Media Technology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.