Correlation Between International Consolidated and IBEX 35
Can any of the company-specific risk be diversified away by investing in both International Consolidated and IBEX 35 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 IBEX 35 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 IBEX 35 Index, you can compare the effects of market volatilities on International Consolidated and IBEX 35 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 IBEX 35. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and IBEX 35.
Diversification Opportunities for International Consolidated and IBEX 35
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between International and IBEX is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and IBEX 35 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBEX 35 Index 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 IBEX 35. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBEX 35 Index has no effect on the direction of International Consolidated i.e., International Consolidated and IBEX 35 go up and down completely randomly.
Pair Corralation between International Consolidated and IBEX 35
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 2.19 times more return on investment than IBEX 35. However, International Consolidated is 2.19 times more volatile than IBEX 35 Index. It trades about 0.08 of its potential returns per unit of risk. IBEX 35 Index is currently generating about 0.08 per unit of risk. If you would invest 154.00 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 142.00 from holding International Consolidated Airlines or generate 92.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
International Consolidated Air vs. IBEX 35 Index
Performance |
| Timeline |
International Consolidated and IBEX 35 Volatility Contrast
Predicted Return Density |
| Returns |
International Consolidated Airlines
Pair trading matchups for International Consolidated
IBEX 35 Index
Pair trading matchups for IBEX 35
Pair Trading with International Consolidated and IBEX 35
The main advantage of trading using opposite International Consolidated and IBEX 35 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, IBEX 35 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 IBEX 35 will offset losses from the drop in IBEX 35's long position.| International Consolidated vs. Metrovacesa SA | International Consolidated vs. Elecnor SA | International Consolidated vs. Mapfre | International Consolidated vs. Amper SA |
| IBEX 35 vs. International Consolidated Airlines | IBEX 35 vs. Ebro Foods | IBEX 35 vs. Plasticos Compuestos SA | IBEX 35 vs. Bankinter |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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