Correlation Between IMedia Brands and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both IMedia Brands and MercadoLibre 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 MercadoLibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMedia Brands and MercadoLibre, you can compare the effects of market volatilities on IMedia Brands and MercadoLibre 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 MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMedia Brands and MercadoLibre.
Diversification Opportunities for IMedia Brands and MercadoLibre
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IMedia and MercadoLibre is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding IMedia Brands and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre 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 MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of IMedia Brands i.e., IMedia Brands and MercadoLibre go up and down completely randomly.
Pair Corralation between IMedia Brands and MercadoLibre
If you would invest 0.04 in IMedia Brands on December 30, 2023 and sell it today you would earn a total of 0.00 from holding IMedia Brands or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 4.55% |
Values | Daily Returns |
IMedia Brands vs. MercadoLibre
Performance |
Timeline |
IMedia Brands |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
MercadoLibre |
IMedia Brands and MercadoLibre Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IMedia Brands and MercadoLibre
The main advantage of trading using opposite IMedia Brands and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMedia Brands position performs unexpectedly, MercadoLibre 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 MercadoLibre will offset losses from the drop in MercadoLibre's long position.IMedia Brands vs. Valhi Inc | IMedia Brands vs. Balchem | IMedia Brands vs. Sun Country Airlines | IMedia Brands vs. Norfolk Southern |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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