Correlation Between Innerscope Advertising and Avinger

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

By analyzing existing cross correlation between Innerscope Advertising Agency and Avinger, you can compare the effects of market volatilities on Innerscope Advertising and Avinger 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 Innerscope Advertising with a short position of Avinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innerscope Advertising and Avinger.

Diversification Opportunities for Innerscope Advertising and Avinger

0.75

Correlation Coefficient

Innerscope Advertising  Avinger

Poor diversification

The 3 months correlation between Innerscope and Avinger is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Innerscope Advertising Agency and Avinger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avinger and Innerscope Advertising 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 Innerscope Advertising Agency are associated (or correlated) with Avinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avinger has no effect on the direction of Innerscope Advertising i.e., Innerscope Advertising and Avinger go up and down completely randomly.

Pair Corralation between Innerscope Advertising and Avinger

Given the investment horizon of 90 days Innerscope Advertising Agency is expected to generate 5.85 times more return on investment than Avinger. However, Innerscope Advertising is 5.85 times more volatile than Avinger. It trades about 0.09 of its potential returns per unit of risk. Avinger is currently generating about -0.09 per unit of risk. If you would invest  50.00  in Innerscope Advertising Agency on September 5, 2024 and sell it today you would lose (44.50) from holding Innerscope Advertising Agency or give up 89.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.43%
Values	Daily Returns

Innerscope Advertising Agency  vs.  Avinger

Innerscope Advertising

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innerscope Advertising Agency has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Avinger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avinger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Avinger is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Innerscope Advertising and Avinger

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

The idea behind Innerscope Advertising Agency and Avinger 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.