Correlation Between Impact Fusion and Stagwell

Can any of the company-specific risk be diversified away by investing in both Impact Fusion and Stagwell 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 Stagwell 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 Stagwell, you can compare the effects of market volatilities on Impact Fusion and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impact Fusion and Stagwell.

Diversification Opportunities for Impact Fusion and Stagwell

-0.11

Correlation Coefficient

Impact Fusion  Stagwell

Good diversification

The 3 months correlation between Impact and Stagwell is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Impact Fusion International and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Impact Fusion i.e., Impact Fusion and Stagwell go up and down completely randomly.

Pair Corralation between Impact Fusion and Stagwell

Given the investment horizon of 90 days Impact Fusion International is expected to generate 2.03 times more return on investment than Stagwell. However, Impact Fusion is 2.03 times more volatile than Stagwell. It trades about 0.04 of its potential returns per unit of risk. Stagwell is currently generating about 0.05 per unit of risk. If you would invest  3.75  in Impact Fusion International on October 5, 2024 and sell it today you would earn a total of  0.70  from holding Impact Fusion International or generate 18.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Impact Fusion International  vs.  Stagwell

Impact Fusion Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact Fusion International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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.

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Impact Fusion and Stagwell

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

The idea behind Impact Fusion International and Stagwell 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.