Correlation Between International Consolidated and Ecclesiastical Insurance
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Ecclesiastical Insurance 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 Ecclesiastical Insurance 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 Ecclesiastical Insurance Office, you can compare the effects of market volatilities on International Consolidated and Ecclesiastical Insurance 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 Ecclesiastical Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Ecclesiastical Insurance.
Diversification Opportunities for International Consolidated and Ecclesiastical Insurance
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Ecclesiastical is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance 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 Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of International Consolidated i.e., International Consolidated and Ecclesiastical Insurance go up and down completely randomly.
Pair Corralation between International Consolidated and Ecclesiastical Insurance
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 2.34 times more return on investment than Ecclesiastical Insurance. However, International Consolidated is 2.34 times more volatile than Ecclesiastical Insurance Office. It trades about 0.1 of its potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about 0.04 per unit of risk. If you would invest 12,184 in International Consolidated Airlines on September 20, 2024 and sell it today you would earn a total of 18,096 from holding International Consolidated Airlines or generate 148.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
International Consolidated Air vs. Ecclesiastical Insurance Offic
Performance |
| Timeline |
| International Consolidated |
| Ecclesiastical Insurance |
International Consolidated and Ecclesiastical Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Ecclesiastical Insurance
The main advantage of trading using opposite International Consolidated and Ecclesiastical Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Ecclesiastical Insurance 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 Ecclesiastical Insurance will offset losses from the drop in Ecclesiastical Insurance's long position.The idea behind International Consolidated Airlines and Ecclesiastical Insurance Office 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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