Correlation Between International Consolidated and Pacific Horizon
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Pacific Horizon 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 Pacific Horizon 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 Pacific Horizon Investment, you can compare the effects of market volatilities on International Consolidated and Pacific Horizon 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 Pacific Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Pacific Horizon.
Diversification Opportunities for International Consolidated and Pacific Horizon
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Pacific is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Pacific Horizon Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Horizon Inve 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 Pacific Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Horizon Inve has no effect on the direction of International Consolidated i.e., International Consolidated and Pacific Horizon go up and down completely randomly.
Pair Corralation between International Consolidated and Pacific Horizon
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 3.18 times more return on investment than Pacific Horizon. However, International Consolidated is 3.18 times more volatile than Pacific Horizon Investment. It trades about 0.38 of its potential returns per unit of risk. Pacific Horizon Investment is currently generating about -0.06 per unit of risk. If you would invest 21,530 in International Consolidated Airlines on August 29, 2024 and sell it today you would earn a total of 3,980 from holding International Consolidated Airlines or generate 18.49% 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. Pacific Horizon Investment
Performance |
| Timeline |
| International Consolidated |
| Pacific Horizon Inve |
International Consolidated and Pacific Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Pacific Horizon
The main advantage of trading using opposite International Consolidated and Pacific Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Pacific Horizon 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 Pacific Horizon will offset losses from the drop in Pacific Horizon's long position.| International Consolidated vs. Lendinvest PLC | International Consolidated vs. Neometals | International Consolidated vs. Coor Service Management | International Consolidated vs. Albion Technology General |
| Pacific Horizon vs. Toyota Motor Corp | Pacific Horizon vs. Lendinvest PLC | Pacific Horizon vs. Neometals | Pacific Horizon vs. Coor Service Management |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |