Correlation Between Fluent and Marchex

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

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

Diversification Opportunities for Fluent and Marchex

-0.56

Correlation Coefficient

Fluent  Marchex

Excellent diversification

The 3 months correlation between Fluent and Marchex is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and Fluent 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 Fluent Inc are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Fluent i.e., Fluent and Marchex go up and down completely randomly.

Pair Corralation between Fluent and Marchex

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the Marchex. In addition to that, Fluent is 1.4 times more volatile than Marchex. It trades about -0.04 of its total potential returns per unit of risk. Marchex is currently generating about 0.14 per unit of volatility. If you would invest  141.00  in Marchex on July 9, 2024 and sell it today you would earn a total of  42.00  from holding Marchex or generate 29.79% return on investment over 90 days.

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

Fluent Inc  vs.  Marchex

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluent Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Marchex

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fluent and Marchex

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

The idea behind Fluent Inc and Marchex 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.