Correlation Between IBEX and Thoughtworks Holding
Can any of the company-specific risk be diversified away by investing in both IBEX and Thoughtworks Holding 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 IBEX and Thoughtworks Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IBEX and Thoughtworks Holding, you can compare the effects of market volatilities on IBEX and Thoughtworks Holding 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 IBEX with a short position of Thoughtworks Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of IBEX and Thoughtworks Holding.
Diversification Opportunities for IBEX and Thoughtworks Holding
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IBEX and Thoughtworks is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding IBEX and Thoughtworks Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoughtworks Holding and IBEX 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 IBEX are associated (or correlated) with Thoughtworks Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thoughtworks Holding has no effect on the direction of IBEX i.e., IBEX and Thoughtworks Holding go up and down completely randomly.
Pair Corralation between IBEX and Thoughtworks Holding
Given the investment horizon of 90 days IBEX is expected to generate 0.69 times more return on investment than Thoughtworks Holding. However, IBEX is 1.46 times less risky than Thoughtworks Holding. It trades about -0.01 of its potential returns per unit of risk. Thoughtworks Holding is currently generating about -0.02 per unit of risk. If you would invest 2,717 in IBEX on August 28, 2024 and sell it today you would lose (625.00) from holding IBEX or give up 23.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.38% |
| Values | Daily Returns |
IBEX vs. Thoughtworks Holding
Performance |
| Timeline |
| IBEX |
| Thoughtworks Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
IBEX and Thoughtworks Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IBEX and Thoughtworks Holding
The main advantage of trading using opposite IBEX and Thoughtworks Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX position performs unexpectedly, Thoughtworks Holding 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 Thoughtworks Holding will offset losses from the drop in Thoughtworks Holding's long position.The idea behind IBEX and Thoughtworks Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Thoughtworks Holding vs. ExlService Holdings | Thoughtworks Holding vs. Genpact Limited | Thoughtworks Holding vs. ASGN Inc | Thoughtworks Holding vs. TTEC Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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