Correlation Between Iridium Communications and Corning Incorporated
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Corning Incorporated 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 Corning Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Corning Incorporated, you can compare the effects of market volatilities on Iridium Communications and Corning Incorporated 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 Corning Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Corning Incorporated.
Diversification Opportunities for Iridium Communications and Corning Incorporated
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iridium and Corning is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated 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 Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Iridium Communications i.e., Iridium Communications and Corning Incorporated go up and down completely randomly.
Pair Corralation between Iridium Communications and Corning Incorporated
Assuming the 90 days horizon Iridium Communications is expected to generate 1.3 times less return on investment than Corning Incorporated. In addition to that, Iridium Communications is 1.48 times more volatile than Corning Incorporated. It trades about 0.07 of its total potential returns per unit of risk. Corning Incorporated is currently generating about 0.13 per unit of volatility. If you would invest 4,356 in Corning Incorporated on September 1, 2024 and sell it today you would earn a total of 204.00 from holding Corning Incorporated or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Corning Incorporated
Performance |
| Timeline |
| Iridium Communications |
| Corning Incorporated |
Iridium Communications and Corning Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Corning Incorporated
The main advantage of trading using opposite Iridium Communications and Corning Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Corning Incorporated 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 Corning Incorporated will offset losses from the drop in Corning Incorporated's long position.| Iridium Communications vs. ATT Inc | Iridium Communications vs. Deutsche Telekom AG | Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. NMI Holdings |
| Corning Incorporated vs. GLG LIFE TECH | Corning Incorporated vs. Axcelis Technologies | Corning Incorporated vs. THORNEY TECHS LTD | Corning Incorporated vs. RCM TECHNOLOGIES |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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