Correlation Between IPower and AKA Brands

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

By analyzing existing cross correlation between iPower Inc and AKA Brands Holding, you can compare the effects of market volatilities on IPower and AKA 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 IPower with a short position of AKA Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPower and AKA Brands.

Diversification Opportunities for IPower and AKA Brands

0.49

Correlation Coefficient

IPower  AKA Brands

Very weak diversification

The 3 months correlation between IPower and AKA is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding iPower Inc and AKA Brands Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKA Brands Holding and IPower 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 iPower Inc are associated (or correlated) with AKA Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKA Brands Holding has no effect on the direction of IPower i.e., IPower and AKA Brands go up and down completely randomly.

Pair Corralation between IPower and AKA Brands

Considering the 90-day investment horizon iPower Inc is expected to generate 1.39 times more return on investment than AKA Brands. However, IPower is 1.39 times more volatile than AKA Brands Holding. It trades about 0.06 of its potential returns per unit of risk. AKA Brands Holding is currently generating about 0.04 per unit of risk. If you would invest  40.00  in iPower Inc on September 20, 2024 and sell it today you would earn a total of  45.60  from holding iPower Inc or generate 114.0% return on investment over 90 days.

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

iPower Inc  vs.  AKA Brands Holding

iPower Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iPower Inc 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 Etf's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

AKA Brands Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AKA Brands Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with IPower and AKA Brands

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

The idea behind iPower Inc and AKA Brands Holding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.