Correlation Between International Consolidated and Anglesey Mining
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Anglesey Mining 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 Anglesey Mining 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 Anglesey Mining, you can compare the effects of market volatilities on International Consolidated and Anglesey Mining 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 Anglesey Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Anglesey Mining.
Diversification Opportunities for International Consolidated and Anglesey Mining
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and Anglesey is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Anglesey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglesey Mining 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 Anglesey Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglesey Mining has no effect on the direction of International Consolidated i.e., International Consolidated and Anglesey Mining go up and down completely randomly.
Pair Corralation between International Consolidated and Anglesey Mining
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 0.3 times more return on investment than Anglesey Mining. However, International Consolidated Airlines is 3.31 times less risky than Anglesey Mining. It trades about 0.39 of its potential returns per unit of risk. Anglesey Mining is currently generating about -0.02 per unit of risk. If you would invest 16,205 in International Consolidated Airlines on November 3, 2024 and sell it today you would earn a total of 17,585 from holding International Consolidated Airlines or generate 108.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Anglesey Mining
Performance |
| Timeline |
| International Consolidated |
| Anglesey Mining |
International Consolidated and Anglesey Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Anglesey Mining
The main advantage of trading using opposite International Consolidated and Anglesey Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Anglesey Mining 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 Anglesey Mining will offset losses from the drop in Anglesey Mining's long position.The idea behind International Consolidated Airlines and Anglesey Mining 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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