Correlation Between Marchex and Ziff Davis

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

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

Diversification Opportunities for Marchex and Ziff Davis

-0.37

Correlation Coefficient

Marchex  Ziff Davis

Very good diversification

The 3 months correlation between Marchex and Ziff is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Ziff Davis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ziff Davis and Marchex 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 Marchex are associated (or correlated) with Ziff Davis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ziff Davis has no effect on the direction of Marchex i.e., Marchex and Ziff Davis go up and down completely randomly.

Pair Corralation between Marchex and Ziff Davis

Given the investment horizon of 90 days Marchex is expected to under-perform the Ziff Davis. In addition to that, Marchex is 1.21 times more volatile than Ziff Davis. It trades about -0.01 of its total potential returns per unit of risk. Ziff Davis is currently generating about 0.11 per unit of volatility. If you would invest  4,887  in Ziff Davis on August 30, 2024 and sell it today you would earn a total of  884.00  from holding Ziff Davis or generate 18.09% return on investment over 90 days.

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

Marchex  vs.  Ziff Davis

Marchex

Risk-Adjusted Performance

0 of 100

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 fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ziff Davis

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ziff Davis are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ziff Davis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marchex and Ziff Davis

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

The idea behind Marchex and Ziff Davis 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.