Correlation Between Interactive Brokers and Flight Centre
Can any of the company-specific risk be diversified away by investing in both Interactive Brokers and Flight Centre 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 Interactive Brokers and Flight Centre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interactive Brokers Group and Flight Centre Travel, you can compare the effects of market volatilities on Interactive Brokers and Flight Centre 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 Interactive Brokers with a short position of Flight Centre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interactive Brokers and Flight Centre.
Diversification Opportunities for Interactive Brokers and Flight Centre
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Interactive and Flight is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Brokers Group and Flight Centre Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flight Centre Travel and Interactive Brokers 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 Interactive Brokers Group are associated (or correlated) with Flight Centre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flight Centre Travel has no effect on the direction of Interactive Brokers i.e., Interactive Brokers and Flight Centre go up and down completely randomly.
Pair Corralation between Interactive Brokers and Flight Centre
Given the investment horizon of 90 days Interactive Brokers Group is expected to generate 11.05 times more return on investment than Flight Centre. However, Interactive Brokers is 11.05 times more volatile than Flight Centre Travel. It trades about 0.19 of its potential returns per unit of risk. Flight Centre Travel is currently generating about 0.12 per unit of risk. If you would invest 12,618 in Interactive Brokers Group on September 1, 2024 and sell it today you would earn a total of 6,491 from holding Interactive Brokers Group or generate 51.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 58.73% |
| Values | Daily Returns |
Interactive Brokers Group vs. Flight Centre Travel
Performance |
| Timeline |
| Interactive Brokers |
| Flight Centre Travel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Interactive Brokers and Flight Centre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interactive Brokers and Flight Centre
The main advantage of trading using opposite Interactive Brokers and Flight Centre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interactive Brokers position performs unexpectedly, Flight Centre 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 Flight Centre will offset losses from the drop in Flight Centre's long position.| Interactive Brokers vs. Live Ventures | Interactive Brokers vs. Bassett Furniture Industries | Interactive Brokers vs. Haverty Furniture Companies | Interactive Brokers vs. Vera Bradley |
| Flight Centre vs. Norwegian Cruise Line | Flight Centre vs. Carnival | Flight Centre vs. Airbnb Inc | Flight Centre vs. Expedia Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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