Correlation Between Integral and Royalty Management

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

By analyzing existing cross correlation between Integral Ad Science and Royalty Management Holding, you can compare the effects of market volatilities on Integral and Royalty Management 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 Integral with a short position of Royalty Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral and Royalty Management.

Diversification Opportunities for Integral and Royalty Management

-0.13

Correlation Coefficient

Integral  Royalty Management

Good diversification

The 3 months correlation between Integral and Royalty is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Integral Ad Science and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management and Integral 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 Integral Ad Science are associated (or correlated) with Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Integral i.e., Integral and Royalty Management go up and down completely randomly.

Pair Corralation between Integral and Royalty Management

Considering the 90-day investment horizon Integral is expected to generate 69.87 times less return on investment than Royalty Management. But when comparing it to its historical volatility, Integral Ad Science is 10.57 times less risky than Royalty Management. It trades about 0.02 of its potential returns per unit of risk. Royalty Management Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.33  in Royalty Management Holding on September 13, 2024 and sell it today you would lose (0.21) from holding Royalty Management Holding or give up 15.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.97%
Values	Daily Returns

Integral Ad Science  vs.  Royalty Management Holding

Integral Ad Science

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Integral Ad Science are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Integral is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Royalty Management

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Royalty Management Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Royalty Management showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integral and Royalty Management

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

The idea behind Integral Ad Science and Royalty Management Holding 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.