Correlation Between Marchex and Trustcash Holdings

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

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

Diversification Opportunities for Marchex and Trustcash Holdings

-0.29

Correlation Coefficient

Marchex  Trustcash Holdings

Very good diversification

The 3 months correlation between Marchex and Trustcash is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Trustcash Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustcash Holdings 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 Trustcash Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustcash Holdings has no effect on the direction of Marchex i.e., Marchex and Trustcash Holdings go up and down completely randomly.

Pair Corralation between Marchex and Trustcash Holdings

Given the investment horizon of 90 days Marchex is expected to generate 131.37 times less return on investment than Trustcash Holdings. But when comparing it to its historical volatility, Marchex is 32.17 times less risky than Trustcash Holdings. It trades about 0.03 of its potential returns per unit of risk. Trustcash Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Trustcash Holdings on October 5, 2024 and sell it today you would lose (0.01) from holding Trustcash Holdings or give up 90.0% of portfolio value over 90 days.

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

Marchex  vs.  Trustcash Holdings

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.

Trustcash Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trustcash Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Trustcash Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marchex and Trustcash Holdings

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

The idea behind Marchex and Trustcash Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.