Correlation Between Intermediate Capital and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Intermediate Capital and Spirent Communications 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 Intermediate Capital and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Capital Group and Spirent Communications plc, you can compare the effects of market volatilities on Intermediate Capital and Spirent Communications 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 Intermediate Capital with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Capital and Spirent Communications.
Diversification Opportunities for Intermediate Capital and Spirent Communications
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Intermediate and Spirent is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Spirent Communications go up and down completely randomly.
Pair Corralation between Intermediate Capital and Spirent Communications
Assuming the 90 days trading horizon Intermediate Capital Group is expected to under-perform the Spirent Communications. In addition to that, Intermediate Capital is 2.75 times more volatile than Spirent Communications plc. It trades about -0.01 of its total potential returns per unit of risk. Spirent Communications plc is currently generating about -0.03 per unit of volatility. If you would invest 17,200 in Spirent Communications plc on August 25, 2024 and sell it today you would lose (100.00) from holding Spirent Communications plc or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Intermediate Capital Group vs. Spirent Communications plc
Performance |
| Timeline |
| Intermediate Capital |
| Spirent Communications |
Intermediate Capital and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Capital and Spirent Communications
The main advantage of trading using opposite Intermediate Capital and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Capital position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Intermediate Capital vs. Catalyst Media Group | Intermediate Capital vs. Oncimmune Holdings plc | Intermediate Capital vs. Invesco Health Care | Intermediate Capital vs. Coor Service Management |
| Spirent Communications vs. Quadrise Plc | Spirent Communications vs. ImmuPharma PLC | Spirent Communications vs. Intuitive Investments Group | Spirent Communications vs. European Metals 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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