Correlation Between IBC Advanced and ADF
Can any of the company-specific risk be diversified away by investing in both IBC Advanced and ADF 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 IBC Advanced and ADF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBC Advanced Alloys and ADF Group, you can compare the effects of market volatilities on IBC Advanced and ADF 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 IBC Advanced with a short position of ADF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBC Advanced and ADF.
Diversification Opportunities for IBC Advanced and ADF
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IBC and ADF is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding IBC Advanced Alloys and ADF Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADF Group and IBC Advanced 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 IBC Advanced Alloys are associated (or correlated) with ADF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADF Group has no effect on the direction of IBC Advanced i.e., IBC Advanced and ADF go up and down completely randomly.
Pair Corralation between IBC Advanced and ADF
Assuming the 90 days horizon IBC Advanced Alloys is expected to under-perform the ADF. But the otc stock apears to be less risky and, when comparing its historical volatility, IBC Advanced Alloys is 1.01 times less risky than ADF. The otc stock trades about -0.22 of its potential returns per unit of risk. The ADF Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 942.00 in ADF Group on September 24, 2024 and sell it today you would earn a total of 77.00 from holding ADF Group or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
IBC Advanced Alloys vs. ADF Group
Performance |
| Timeline |
| IBC Advanced Alloys |
| ADF Group |
IBC Advanced and ADF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBC Advanced and ADF
The main advantage of trading using opposite IBC Advanced and ADF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBC Advanced position performs unexpectedly, ADF 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 ADF will offset losses from the drop in ADF's long position.| IBC Advanced vs. ESAB Corp | IBC Advanced vs. Worthington Industries | IBC Advanced vs. Allegheny Technologies Incorporated | IBC Advanced vs. Insteel Industries |
| ADF vs. IBC Advanced Alloys | ADF vs. Ucore Rare Metals | ADF vs. Commerce Resources Corp | ADF vs. Focus Graphite |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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