Correlation Between International Consolidated and Acerinox
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Acerinox 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 Acerinox 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 Acerinox, you can compare the effects of market volatilities on International Consolidated and Acerinox 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 Acerinox. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Acerinox.
Diversification Opportunities for International Consolidated and Acerinox
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Acerinox is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Acerinox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acerinox 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 Acerinox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acerinox has no effect on the direction of International Consolidated i.e., International Consolidated and Acerinox go up and down completely randomly.
Pair Corralation between International Consolidated and Acerinox
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 1.28 times more return on investment than Acerinox. However, International Consolidated is 1.28 times more volatile than Acerinox. It trades about 0.13 of its potential returns per unit of risk. Acerinox is currently generating about 0.03 per unit of risk. If you would invest 162.00 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 134.00 from holding International Consolidated Airlines or generate 82.72% 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. Acerinox
Performance |
| Timeline |
| International Consolidated |
| Acerinox |
International Consolidated and Acerinox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Acerinox
The main advantage of trading using opposite International Consolidated and Acerinox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Acerinox 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 Acerinox will offset losses from the drop in Acerinox's long position.| International Consolidated vs. Metrovacesa SA | International Consolidated vs. Elecnor SA | International Consolidated vs. Mapfre | International Consolidated vs. Amper SA |
| Acerinox vs. ACS Actividades de | Acerinox vs. ArcelorMittal SA | Acerinox vs. Mapfre | Acerinox vs. Ferrovial |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |