Correlation Between IMedia Brands and LightInTheBox Holding

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Can any of the company-specific risk be diversified away by investing in both IMedia Brands and LightInTheBox Holding 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 IMedia Brands and LightInTheBox Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMedia Brands and LightInTheBox Holding Co, you can compare the effects of market volatilities on IMedia Brands and LightInTheBox Holding 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 IMedia Brands with a short position of LightInTheBox Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMedia Brands and LightInTheBox Holding.

Diversification Opportunities for IMedia Brands and LightInTheBox Holding

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between IMedia and LightInTheBox is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding IMedia Brands and LightInTheBox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightInTheBox Holding and IMedia Brands 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 IMedia Brands are associated (or correlated) with LightInTheBox Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightInTheBox Holding has no effect on the direction of IMedia Brands i.e., IMedia Brands and LightInTheBox Holding go up and down completely randomly.

Pair Corralation between IMedia Brands and LightInTheBox Holding

Given the investment horizon of 90 days IMedia Brands is expected to under-perform the LightInTheBox Holding. In addition to that, IMedia Brands is 3.1 times more volatile than LightInTheBox Holding Co. It trades about -0.1 of its total potential returns per unit of risk. LightInTheBox Holding Co is currently generating about 0.0 per unit of volatility. If you would invest  115.00  in LightInTheBox Holding Co on December 29, 2023 and sell it today you would lose (43.00) from holding LightInTheBox Holding Co or give up 37.39% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy72.27%
ValuesDaily Returns

IMedia Brands  vs.  LightInTheBox Holding Co

 Performance 
       Timeline  
IMedia Brands 

Risk-Adjusted Performance

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Over the last 90 days IMedia Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, IMedia Brands is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
LightInTheBox Holding 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days LightInTheBox Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

IMedia Brands and LightInTheBox Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IMedia Brands and LightInTheBox Holding

The main advantage of trading using opposite IMedia Brands and LightInTheBox Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMedia Brands position performs unexpectedly, LightInTheBox Holding 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 LightInTheBox Holding will offset losses from the drop in LightInTheBox Holding's long position.
The idea behind IMedia Brands and LightInTheBox Holding Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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