Correlation Between Perion Network and IAC

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

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

Diversification Opportunities for Perion Network and IAC

0.59

Correlation Coefficient

Perion Network  IAC

Very weak diversification

The 3 months correlation between Perion and IAC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Perion Network and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc and Perion Network 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 Perion Network 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 Perion Network i.e., Perion Network and IAC go up and down completely randomly.

Pair Corralation between Perion Network and IAC

Given the investment horizon of 90 days Perion Network is expected to generate 1.96 times less return on investment than IAC. But when comparing it to its historical volatility, Perion Network is 1.08 times less risky than IAC. It trades about 0.06 of its potential returns per unit of risk. IAC Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5,148  in IAC Inc on February 6, 2024 and sell it today you would earn a total of  342.00  from holding IAC Inc or generate 6.64% return on investment over 90 days.

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

Perion Network  vs.  IAC Inc

Perion Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perion Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

IAC Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IAC Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, IAC may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Perion Network and IAC

The main advantage of trading using opposite Perion Network and IAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perion Network 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 Perion Network 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.