Correlation Between International Consolidated and Merlin Properties
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Merlin Properties 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 Merlin Properties 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 Merlin Properties SOCIMI, you can compare the effects of market volatilities on International Consolidated and Merlin Properties 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 Merlin Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Merlin Properties.
Diversification Opportunities for International Consolidated and Merlin Properties
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and Merlin is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Merlin Properties SOCIMI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merlin Properties SOCIMI 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 Merlin Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merlin Properties SOCIMI has no effect on the direction of International Consolidated i.e., International Consolidated and Merlin Properties go up and down completely randomly.
Pair Corralation between International Consolidated and Merlin Properties
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 0.83 times more return on investment than Merlin Properties. However, International Consolidated Airlines is 1.2 times less risky than Merlin Properties. It trades about 0.51 of its potential returns per unit of risk. Merlin Properties SOCIMI is currently generating about 0.04 per unit of risk. If you would invest 254.00 in International Consolidated Airlines on September 4, 2024 and sell it today you would earn a total of 61.00 from holding International Consolidated Airlines or generate 24.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Merlin Properties SOCIMI
Performance |
| Timeline |
| International Consolidated |
| Merlin Properties SOCIMI |
International Consolidated and Merlin Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Merlin Properties
The main advantage of trading using opposite International Consolidated and Merlin Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Merlin Properties 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 Merlin Properties will offset losses from the drop in Merlin Properties' long position.| International Consolidated vs. Metrovacesa SA | International Consolidated vs. Elecnor SA | International Consolidated vs. Mapfre | International Consolidated vs. Tander Inversiones SOCIMI |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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