Correlation Between Cairn Homes and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Intermediate Capital 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 Cairn Homes and Intermediate Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Intermediate Capital Group, you can compare the effects of market volatilities on Cairn Homes and Intermediate Capital 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 Cairn Homes with a short position of Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Intermediate Capital.
Diversification Opportunities for Cairn Homes and Intermediate Capital
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cairn and Intermediate is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Cairn Homes i.e., Cairn Homes and Intermediate Capital go up and down completely randomly.
Pair Corralation between Cairn Homes and Intermediate Capital
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.92 times more return on investment than Intermediate Capital. However, Cairn Homes PLC is 1.09 times less risky than Intermediate Capital. It trades about 0.11 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.08 per unit of risk. If you would invest 6,892 in Cairn Homes PLC on August 27, 2024 and sell it today you would earn a total of 10,608 from holding Cairn Homes PLC or generate 153.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cairn Homes PLC vs. Intermediate Capital Group
Performance |
| Timeline |
| Cairn Homes PLC |
| Intermediate Capital |
Cairn Homes and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Intermediate Capital
The main advantage of trading using opposite Cairn Homes and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Cairn Homes vs. Tungsten West PLC | Cairn Homes vs. Argo Group Limited | Cairn Homes vs. Hardide PLC | Cairn Homes vs. Versarien PLC |
| Intermediate Capital vs. Universal Display Corp | Intermediate Capital vs. Hansa Investment | Intermediate Capital vs. Bankers Investment Trust | Intermediate Capital vs. Aberdeen Diversified Income |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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