Correlation Between Stagwell and Marchex

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

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

Diversification Opportunities for Stagwell and Marchex

0.33

Correlation Coefficient

Stagwell  Marchex

Weak diversification

The 3 months correlation between Stagwell and Marchex is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex 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 Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Stagwell i.e., Stagwell and Marchex go up and down completely randomly.

Pair Corralation between Stagwell and Marchex

Given the investment horizon of 90 days Stagwell is expected to generate 0.88 times more return on investment than Marchex. However, Stagwell is 1.14 times less risky than Marchex. It trades about -0.05 of its potential returns per unit of risk. Marchex is currently generating about -0.07 per unit of risk. If you would invest  667.00  in Stagwell on December 21, 2024 and sell it today you would lose (57.00) from holding Stagwell or give up 8.55% of portfolio value over 90 days.

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

Stagwell  vs.  Marchex

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.

Marchex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Stagwell and Marchex

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

The idea behind Stagwell and Marchex 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.