Correlation Between IMedia Brands and Chicken Soup

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

By analyzing existing cross correlation between IMedia Brands 85 and Chicken Soup For, you can compare the effects of market volatilities on IMedia Brands and Chicken Soup 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 IMedia Brands with a short position of Chicken Soup. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMedia Brands and Chicken Soup.

Diversification Opportunities for IMedia Brands and Chicken Soup

0.3

Correlation Coefficient

IMedia Brands  Chicken Soup

Weak diversification

The 3 months correlation between IMedia and Chicken is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding IMedia Brands 85 and Chicken Soup For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicken Soup For and IMedia Brands 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 IMedia Brands 85 are associated (or correlated) with Chicken Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicken Soup For has no effect on the direction of IMedia Brands i.e., IMedia Brands and Chicken Soup go up and down completely randomly.

Pair Corralation between IMedia Brands and Chicken Soup

Assuming the 90 days horizon IMedia Brands 85 is expected to under-perform the Chicken Soup. In addition to that, IMedia Brands is 1.42 times more volatile than Chicken Soup For. It trades about -0.11 of its total potential returns per unit of risk. Chicken Soup For is currently generating about -0.1 per unit of volatility. If you would invest  1,682  in Chicken Soup For on September 27, 2024 and sell it today you would lose (1,655) from holding Chicken Soup For or give up 98.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	31.55%
Values	Daily Returns

IMedia Brands 85  vs.  Chicken Soup For

IMedia Brands 85

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IMedia Brands 85 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, IMedia Brands is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Chicken Soup For

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chicken Soup For has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Chicken Soup is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IMedia Brands and Chicken Soup

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

The idea behind IMedia Brands 85 and Chicken Soup For 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.