Correlation Between Intercontinental and SP Global
Can any of the company-specific risk be diversified away by investing in both Intercontinental and SP Global 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 Intercontinental and SP Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intercontinental Exchange and SP Global, you can compare the effects of market volatilities on Intercontinental and SP Global 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 Intercontinental with a short position of SP Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercontinental and SP Global.
Diversification Opportunities for Intercontinental and SP Global
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Intercontinental and SPGI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Intercontinental Exchange and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global and Intercontinental 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 Intercontinental Exchange are associated (or correlated) with SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of Intercontinental i.e., Intercontinental and SP Global go up and down completely randomly.
Pair Corralation between Intercontinental and SP Global
Considering the 90-day investment horizon Intercontinental Exchange is expected to generate 0.89 times more return on investment than SP Global. However, Intercontinental Exchange is 1.13 times less risky than SP Global. It trades about 0.11 of its potential returns per unit of risk. SP Global is currently generating about 0.07 per unit of risk. If you would invest 11,047 in Intercontinental Exchange on August 28, 2024 and sell it today you would earn a total of 4,916 from holding Intercontinental Exchange or generate 44.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intercontinental Exchange vs. SP Global
Performance |
| Timeline |
| Intercontinental Exchange |
| SP Global |
Intercontinental and SP Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intercontinental and SP Global
The main advantage of trading using opposite Intercontinental and SP Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercontinental position performs unexpectedly, SP Global 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 SP Global will offset losses from the drop in SP Global's long position.| Intercontinental vs. Nasdaq Inc | Intercontinental vs. SP Global | Intercontinental vs. Moodys | Intercontinental vs. FactSet Research Systems |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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