Correlation Between IZEA and Alphabet

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

By analyzing existing cross correlation between IZEA Inc and Alphabet Inc Class C, you can compare the effects of market volatilities on IZEA and Alphabet 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 IZEA with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of IZEA and Alphabet.

Diversification Opportunities for IZEA and Alphabet

0.68

Correlation Coefficient

IZEA  Alphabet

Poor diversification

The 3 months correlation between IZEA and Alphabet is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding IZEA Inc and Alphabet Inc Class C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class C and IZEA 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 IZEA Inc are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class C has no effect on the direction of IZEA i.e., IZEA and Alphabet go up and down completely randomly.

Pair Corralation between IZEA and Alphabet

Given the investment horizon of 90 days IZEA Inc is expected to under-perform the Alphabet. In addition to that, IZEA is 1.5 times more volatile than Alphabet Inc Class C. It trades about -0.12 of its total potential returns per unit of risk. Alphabet Inc Class C is currently generating about -0.16 per unit of volatility. If you would invest  19,247  in Alphabet Inc Class C on December 28, 2024 and sell it today you would lose (3,641) from holding Alphabet Inc Class C or give up 18.92% of portfolio value over 90 days.

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

IZEA Inc  vs.  Alphabet Inc Class C

IZEA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days IZEA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alphabet Class C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with IZEA and Alphabet

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

The idea behind IZEA Inc and Alphabet Inc Class C 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.