Correlation Between Integral and Spectrum Brands

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

By analyzing existing cross correlation between Integral Ad Science and Spectrum Brands Holdings, you can compare the effects of market volatilities on Integral and Spectrum Brands 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 Integral with a short position of Spectrum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and Spectrum Brands.

Diversification Opportunities for Integral and Spectrum Brands

0.62

Correlation Coefficient

Integral  Spectrum Brands

Poor diversification

The 3 months correlation between Integral and Spectrum is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and Spectrum Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Brands Holdings and Integral 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 Integral Ad Science are associated (or correlated) with Spectrum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Brands Holdings has no effect on the direction of Integral i.e., Integral and Spectrum Brands go up and down completely randomly.

Pair Corralation between Integral and Spectrum Brands

Considering the 90-day investment horizon Integral Ad Science is expected to under-perform the Spectrum Brands. In addition to that, Integral is 1.96 times more volatile than Spectrum Brands Holdings. It trades about -0.07 of its total potential returns per unit of risk. Spectrum Brands Holdings is currently generating about -0.07 per unit of volatility. If you would invest  8,966  in Spectrum Brands Holdings on October 26, 2024 and sell it today you would lose (564.00) from holding Spectrum Brands Holdings or give up 6.29% of portfolio value over 90 days.

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

Integral Ad Science  vs.  Spectrum Brands Holdings

Integral Ad Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Ad Science 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Spectrum Brands Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Integral and Spectrum Brands

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

The idea behind Integral Ad Science and Spectrum Brands Holdings 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.

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 the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.