Correlation Between Impact Fusion and CMG Holdings

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

By analyzing existing cross correlation between Impact Fusion International and CMG Holdings Group, you can compare the effects of market volatilities on Impact Fusion and CMG Holdings 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 Impact Fusion with a short position of CMG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impact Fusion and CMG Holdings.

Diversification Opportunities for Impact Fusion and CMG Holdings

-0.64

Correlation Coefficient

Impact Fusion  CMG Holdings

Excellent diversification

The 3 months correlation between Impact and CMG is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Impact Fusion International and CMG Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Holdings Group and Impact Fusion 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 Impact Fusion International are associated (or correlated) with CMG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Holdings Group has no effect on the direction of Impact Fusion i.e., Impact Fusion and CMG Holdings go up and down completely randomly.

Pair Corralation between Impact Fusion and CMG Holdings

Given the investment horizon of 90 days Impact Fusion International is expected to generate 0.81 times more return on investment than CMG Holdings. However, Impact Fusion International is 1.24 times less risky than CMG Holdings. It trades about 0.18 of its potential returns per unit of risk. CMG Holdings Group is currently generating about 0.03 per unit of risk. If you would invest  4.20  in Impact Fusion International on December 26, 2024 and sell it today you would earn a total of  5.12  from holding Impact Fusion International or generate 121.9% return on investment over 90 days.

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

Impact Fusion International  vs.  CMG Holdings Group

Impact Fusion Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Impact Fusion International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Impact Fusion unveiled solid returns over the last few months and may actually be approaching a breakup point.

CMG Holdings Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CMG Holdings Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CMG Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Impact Fusion and CMG Holdings

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

The idea behind Impact Fusion International and CMG Holdings Group 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.