Correlation Between International Consolidated and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Aedas Homes 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 Aedas Homes 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 Aedas Homes SL, you can compare the effects of market volatilities on International Consolidated and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Aedas Homes.
Diversification Opportunities for International Consolidated and Aedas Homes
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Aedas is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Aedas Homes SL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SL 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 Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SL has no effect on the direction of International Consolidated i.e., International Consolidated and Aedas Homes go up and down completely randomly.
Pair Corralation between International Consolidated and Aedas Homes
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 1.13 times more return on investment than Aedas Homes. However, International Consolidated is 1.13 times more volatile than Aedas Homes SL. It trades about 0.12 of its potential returns per unit of risk. Aedas Homes SL is currently generating about 0.13 per unit of risk. If you would invest 175.00 in International Consolidated Airlines on August 26, 2024 and sell it today you would earn a total of 121.00 from holding International Consolidated Airlines or generate 69.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Aedas Homes SL
Performance |
| Timeline |
| International Consolidated |
| Aedas Homes SL |
International Consolidated and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Aedas Homes
The main advantage of trading using opposite International Consolidated and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| International Consolidated vs. Metrovacesa SA | International Consolidated vs. Elecnor SA | International Consolidated vs. Mapfre | International Consolidated vs. Amper SA |
| Aedas Homes vs. Neinor Homes SLU | Aedas Homes vs. Metrovacesa SA | Aedas Homes vs. Atresmedia Corporacin de |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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