Correlation Between IAC and Outbrain

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

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

Diversification Opportunities for IAC and Outbrain

0.13

Correlation Coefficient

IAC  Outbrain

Average diversification

The 3 months correlation between IAC and Outbrain is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding IAC Inc and Outbrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outbrain and IAC 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 IAC Inc are associated (or correlated) with Outbrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outbrain has no effect on the direction of IAC i.e., IAC and Outbrain go up and down completely randomly.

Pair Corralation between IAC and Outbrain

Considering the 90-day investment horizon IAC Inc is expected to generate 0.67 times more return on investment than Outbrain. However, IAC Inc is 1.49 times less risky than Outbrain. It trades about 0.03 of its potential returns per unit of risk. Outbrain is currently generating about -0.15 per unit of risk. If you would invest  3,406  in IAC Inc on February 3, 2025 and sell it today you would earn a total of  125.00  from holding IAC Inc or generate 3.67% return on investment over 90 days.

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

IAC Inc  vs.  Outbrain

IAC Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IAC Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IAC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Outbrain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outbrain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with IAC and Outbrain

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

The idea behind IAC Inc and Outbrain 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.