Correlation Between Marchex and Stagwell

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

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

Diversification Opportunities for Marchex and Stagwell

0.09

Correlation Coefficient

Marchex  Stagwell

Significant diversification

The 3 months correlation between Marchex and Stagwell is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell and Marchex 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 Marchex are associated (or correlated) with Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Marchex i.e., Marchex and Stagwell go up and down completely randomly.

Pair Corralation between Marchex and Stagwell

Given the investment horizon of 90 days Marchex is expected to generate 1.45 times less return on investment than Stagwell. In addition to that, Marchex is 1.01 times more volatile than Stagwell. It trades about 0.01 of its total potential returns per unit of risk. Stagwell is currently generating about 0.01 per unit of volatility. If you would invest  696.00  in Stagwell on October 5, 2024 and sell it today you would lose (49.00) from holding Stagwell or give up 7.04% of portfolio value over 90 days.

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

Marchex  vs.  Stagwell

Marchex

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Marchex and Stagwell

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

The idea behind Marchex and Stagwell 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.