Correlation Between Fiverr International and IAC

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

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

Diversification Opportunities for Fiverr International and IAC

-0.6

Correlation Coefficient

Fiverr International  IAC

Excellent diversification

The 3 months correlation between Fiverr and IAC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fiverr International and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc and Fiverr International 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 Fiverr International are associated (or correlated) with IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of Fiverr International i.e., Fiverr International and IAC go up and down completely randomly.

Pair Corralation between Fiverr International and IAC

Given the investment horizon of 90 days Fiverr International is expected to generate 1.66 times more return on investment than IAC. However, Fiverr International is 1.66 times more volatile than IAC Inc. It trades about 0.04 of its potential returns per unit of risk. IAC Inc is currently generating about 0.01 per unit of risk. If you would invest  2,713  in Fiverr International on September 4, 2024 and sell it today you would earn a total of  733.00  from holding Fiverr International or generate 27.02% return on investment over 90 days.

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

Fiverr International  vs.  IAC Inc

Fiverr International

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fiverr International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fiverr International reported solid returns over the last few months and may actually be approaching a breakup point.

IAC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IAC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fiverr International and IAC

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

The idea behind Fiverr International and IAC Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.