Correlation Between Constellium and International Tower
Can any of the company-specific risk be diversified away by investing in both Constellium and International Tower 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 Constellium and International Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellium Nv and International Tower Hill, you can compare the effects of market volatilities on Constellium and International Tower 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 Constellium with a short position of International Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellium and International Tower.
Diversification Opportunities for Constellium and International Tower
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Constellium and International is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill and Constellium 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 Constellium Nv are associated (or correlated) with International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Constellium i.e., Constellium and International Tower go up and down completely randomly.
Pair Corralation between Constellium and International Tower
Given the investment horizon of 90 days Constellium Nv is expected to under-perform the International Tower. But the stock apears to be less risky and, when comparing its historical volatility, Constellium Nv is 1.13 times less risky than International Tower. The stock trades about -0.06 of its potential returns per unit of risk. The International Tower Hill is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 54.00 in International Tower Hill on September 5, 2024 and sell it today you would lose (6.00) from holding International Tower Hill or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellium Nv vs. International Tower Hill
Performance |
| Timeline |
| Constellium Nv |
| International Tower Hill |
Constellium and International Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellium and International Tower
The main advantage of trading using opposite Constellium and International Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellium position performs unexpectedly, International Tower 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 International Tower will offset losses from the drop in International Tower's long position.| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
| International Tower vs. Constellium Nv | International Tower vs. Century Aluminum | International Tower vs. China Hongqiao Group | International Tower vs. Kaiser Aluminum |
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 CEOs Directory module to screen CEOs from public companies around the world.
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