Correlation Between Stagwell and Innovid Corp

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

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

Diversification Opportunities for Stagwell and Innovid Corp

-0.53

Correlation Coefficient

Stagwell  Innovid Corp

Excellent diversification

The 3 months correlation between Stagwell and Innovid is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Innovid Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovid Corp and Stagwell 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 Stagwell 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 Stagwell i.e., Stagwell and Innovid Corp go up and down completely randomly.

Pair Corralation between Stagwell and Innovid Corp

Given the investment horizon of 90 days Stagwell is expected to under-perform the Innovid Corp. In addition to that, Stagwell is 4.12 times more volatile than Innovid Corp. It trades about -0.05 of its total potential returns per unit of risk. Innovid Corp is currently generating about 0.09 per unit of volatility. If you would invest  309.00  in Innovid Corp on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Innovid Corp or generate 1.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.82%
Values	Daily Returns

Stagwell  vs.  Innovid Corp

Stagwell

Risk-Adjusted Performance

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 latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Innovid Corp

Risk-Adjusted Performance

OK

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

Pair Trading with Stagwell and Innovid Corp

The main advantage of trading using opposite Stagwell and Innovid Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell 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 Stagwell 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.