Correlation Between Alfa Financial and Intercontinental
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Intercontinental 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 Alfa Financial and Intercontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and Intercontinental Exchange, you can compare the effects of market volatilities on Alfa Financial and Intercontinental 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 Alfa Financial with a short position of Intercontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Intercontinental.
Diversification Opportunities for Alfa Financial and Intercontinental
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alfa and Intercontinental is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Intercontinental Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercontinental Exchange and Alfa Financial 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 Alfa Financial Software are associated (or correlated) with Intercontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercontinental Exchange has no effect on the direction of Alfa Financial i.e., Alfa Financial and Intercontinental go up and down completely randomly.
Pair Corralation between Alfa Financial and Intercontinental
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 2.51 times more return on investment than Intercontinental. However, Alfa Financial is 2.51 times more volatile than Intercontinental Exchange. It trades about 0.16 of its potential returns per unit of risk. Intercontinental Exchange is currently generating about 0.11 per unit of risk. If you would invest 252.00 in Alfa Financial Software on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Alfa Financial Software or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alfa Financial Software vs. Intercontinental Exchange
Performance |
| Timeline |
| Alfa Financial Software |
| Intercontinental Exchange |
Alfa Financial and Intercontinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Intercontinental
The main advantage of trading using opposite Alfa Financial and Intercontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Intercontinental 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 Intercontinental will offset losses from the drop in Intercontinental's long position.| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
| Intercontinental vs. CME Group | Intercontinental vs. Hong Kong Exchanges | Intercontinental vs. London Stock Exchange | Intercontinental vs. Deutsche Brse AG |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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