Correlation Between Iridium Communications and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Air Liquide 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 Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Air Liquide SA, you can compare the effects of market volatilities on Iridium Communications and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Air Liquide.
Diversification Opportunities for Iridium Communications and Air Liquide
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iridium and Air is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Iridium Communications i.e., Iridium Communications and Air Liquide go up and down completely randomly.
Pair Corralation between Iridium Communications and Air Liquide
Assuming the 90 days horizon Iridium Communications is expected to generate 3.05 times more return on investment than Air Liquide. However, Iridium Communications is 3.05 times more volatile than Air Liquide SA. It trades about 0.11 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.08 per unit of risk. If you would invest 2,437 in Iridium Communications on September 12, 2024 and sell it today you would earn a total of 537.00 from holding Iridium Communications or generate 22.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Air Liquide SA
Performance |
| Timeline |
| Iridium Communications |
| Air Liquide SA |
Iridium Communications and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Air Liquide
The main advantage of trading using opposite Iridium Communications and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. SIVERS SEMICONDUCTORS AB | Iridium Communications vs. Norsk Hydro ASA | Iridium Communications vs. Reliance Steel Aluminum |
| Air Liquide vs. HYDROFARM HLD GRP | Air Liquide vs. DAIRY FARM INTL | Air Liquide vs. Sumitomo Mitsui Construction | Air Liquide vs. Hanison Construction Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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