Correlation Between Iridium Communications and Broadwind
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Broadwind 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 Iridium Communications and Broadwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Broadwind, you can compare the effects of market volatilities on Iridium Communications and Broadwind 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 Iridium Communications with a short position of Broadwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Broadwind.
Diversification Opportunities for Iridium Communications and Broadwind
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Iridium and Broadwind is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Broadwind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadwind and Iridium Communications 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 Iridium Communications are associated (or correlated) with Broadwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadwind has no effect on the direction of Iridium Communications i.e., Iridium Communications and Broadwind go up and down completely randomly.
Pair Corralation between Iridium Communications and Broadwind
Assuming the 90 days horizon Iridium Communications is expected to under-perform the Broadwind. But the stock apears to be less risky and, when comparing its historical volatility, Iridium Communications is 2.45 times less risky than Broadwind. The stock trades about -0.08 of its potential returns per unit of risk. The Broadwind is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 165.00 in Broadwind on October 14, 2024 and sell it today you would earn a total of 12.00 from holding Broadwind or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Broadwind
Performance |
| Timeline |
| Iridium Communications |
| Broadwind |
Iridium Communications and Broadwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Broadwind
The main advantage of trading using opposite Iridium Communications and Broadwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Broadwind 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 Broadwind will offset losses from the drop in Broadwind's long position.| Iridium Communications vs. BRAGG GAMING GRP | Iridium Communications vs. GigaMedia | Iridium Communications vs. GAMESTOP | Iridium Communications vs. Boyd Gaming |
| Broadwind vs. DETALION GAMES SA | Broadwind vs. Sunstone Hotel Investors | Broadwind vs. Choice Hotels International | Broadwind vs. The Hongkong and |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |