Correlation Between NYSE Composite and Innovid Corp

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

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

Diversification Opportunities for NYSE Composite and Innovid Corp

-0.32

Correlation Coefficient

NYSE Composite  Innovid Corp

Very good diversification

The 3 months correlation between NYSE and Innovid is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Innovid Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovid Corp and NYSE Composite 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 NYSE Composite are associated (or correlated) with Innovid Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovid Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Innovid Corp go up and down completely randomly.

Pair Corralation between NYSE Composite and Innovid Corp

Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Innovid Corp. In addition to that, NYSE Composite is 1.91 times more volatile than Innovid Corp. It trades about -0.02 of its total potential returns per unit of risk. Innovid Corp is currently generating about 0.22 per unit of volatility. If you would invest  311.00  in Innovid Corp on November 28, 2024 and sell it today you would earn a total of  3.00  from holding Innovid Corp or generate 0.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

NYSE Composite  vs.  Innovid Corp

Pair Trading with NYSE Composite and Innovid Corp

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

The idea behind NYSE Composite and Innovid 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.

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 CEOs Directory module to screen CEOs from public companies around the world.