Correlation Between ISign Media and Marvel Discovery

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

By analyzing existing cross correlation between iSign Media Solutions and Marvel Discovery Corp, you can compare the effects of market volatilities on ISign Media and Marvel Discovery 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 ISign Media with a short position of Marvel Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISign Media and Marvel Discovery.

Diversification Opportunities for ISign Media and Marvel Discovery

-0.06

Correlation Coefficient

ISign Media  Marvel Discovery

Good diversification

The 3 months correlation between ISign and Marvel is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding iSign Media Solutions and Marvel Discovery Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marvel Discovery Corp and ISign Media 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 iSign Media Solutions are associated (or correlated) with Marvel Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marvel Discovery Corp has no effect on the direction of ISign Media i.e., ISign Media and Marvel Discovery go up and down completely randomly.

Pair Corralation between ISign Media and Marvel Discovery

Assuming the 90 days horizon iSign Media Solutions is expected to generate 0.05 times more return on investment than Marvel Discovery. However, iSign Media Solutions is 18.45 times less risky than Marvel Discovery. It trades about -0.01 of its potential returns per unit of risk. Marvel Discovery Corp is currently generating about -0.12 per unit of risk. If you would invest  1,382  in iSign Media Solutions on September 25, 2024 and sell it today you would lose (3.00) from holding iSign Media Solutions or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

iSign Media Solutions  vs.  Marvel Discovery Corp

iSign Media Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

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

Marvel Discovery Corp

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marvel Discovery Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Marvel Discovery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ISign Media and Marvel Discovery

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

The idea behind iSign Media Solutions and Marvel Discovery Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.