Correlation Between IZEA and Locafy

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

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

Diversification Opportunities for IZEA and Locafy

0.13

Correlation Coefficient

IZEA  Locafy

Average diversification

The 3 months correlation between IZEA and Locafy is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding IZEA Inc and Locafy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locafy 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 Locafy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locafy has no effect on the direction of IZEA i.e., IZEA and Locafy go up and down completely randomly.

Pair Corralation between IZEA and Locafy

Given the investment horizon of 90 days IZEA is expected to generate 4.33 times less return on investment than Locafy. But when comparing it to its historical volatility, IZEA Inc is 2.99 times less risky than Locafy. It trades about 0.02 of its potential returns per unit of risk. Locafy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  810.00  in Locafy on August 31, 2024 and sell it today you would lose (90.00) from holding Locafy or give up 11.11% of portfolio value over 90 days.

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

IZEA Inc  vs.  Locafy

IZEA Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IZEA Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, IZEA sustained solid returns over the last few months and may actually be approaching a breakup point.

Locafy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Locafy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Locafy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IZEA and Locafy

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

The idea behind IZEA Inc and Locafy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.