Correlation Between Trump Media and IAC

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

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

Diversification Opportunities for Trump Media and IAC

-0.51

Correlation Coefficient

Trump Media  IAC

Excellent diversification

The 3 months correlation between Trump and IAC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Trump Media Technology and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc and Trump 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 Trump Media Technology are associated (or correlated) with IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of Trump Media i.e., Trump Media and IAC go up and down completely randomly.

Pair Corralation between Trump Media and IAC

Assuming the 90 days horizon Trump Media Technology is expected to under-perform the IAC. In addition to that, Trump Media is 2.52 times more volatile than IAC Inc. It trades about -0.03 of its total potential returns per unit of risk. IAC Inc is currently generating about 0.09 per unit of volatility. If you would invest  4,313  in IAC Inc on December 27, 2024 and sell it today you would earn a total of  529.00  from holding IAC Inc or generate 12.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Trump Media Technology  vs.  IAC Inc

Trump Media Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trump Media Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

IAC Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IAC Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, IAC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trump Media and IAC

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

The idea behind Trump Media Technology and IAC 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.