Correlation Between International Consolidated and Ion Beam
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Ion Beam 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 International Consolidated and Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Ion Beam Applications, you can compare the effects of market volatilities on International Consolidated and Ion Beam 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 International Consolidated with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Ion Beam.
Diversification Opportunities for International Consolidated and Ion Beam
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Ion is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of International Consolidated i.e., International Consolidated and Ion Beam go up and down completely randomly.
Pair Corralation between International Consolidated and Ion Beam
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 0.9 times more return on investment than Ion Beam. However, International Consolidated Airlines is 1.11 times less risky than Ion Beam. It trades about 0.32 of its potential returns per unit of risk. Ion Beam Applications is currently generating about 0.01 per unit of risk. If you would invest 30,260 in International Consolidated Airlines on November 3, 2024 and sell it today you would earn a total of 3,530 from holding International Consolidated Airlines or generate 11.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Ion Beam Applications
Performance |
| Timeline |
| International Consolidated |
| Ion Beam Applications |
International Consolidated and Ion Beam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Ion Beam
The main advantage of trading using opposite International Consolidated and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Ion Beam 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 Ion Beam will offset losses from the drop in Ion Beam's long position.The idea behind International Consolidated Airlines and Ion Beam Applications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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