Correlation Between IDT and Access Power
Can any of the company-specific risk be diversified away by investing in both IDT and Access Power 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 IDT and Access Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDT Corporation and Access Power Co, you can compare the effects of market volatilities on IDT and Access Power 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 IDT with a short position of Access Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDT and Access Power.
Diversification Opportunities for IDT and Access Power
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between IDT and Access is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding IDT Corp. and Access Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Access Power and IDT 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 IDT Corporation are associated (or correlated) with Access Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Access Power has no effect on the direction of IDT i.e., IDT and Access Power go up and down completely randomly.
Pair Corralation between IDT and Access Power
Considering the 90-day investment horizon IDT is expected to generate 20.88 times less return on investment than Access Power. But when comparing it to its historical volatility, IDT Corporation is 13.08 times less risky than Access Power. It trades about 0.07 of its potential returns per unit of risk. Access Power Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.18 in Access Power Co on November 3, 2024 and sell it today you would lose (0.01) from holding Access Power Co or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDT Corp. vs. Access Power Co
Performance |
| Timeline |
| IDT Corporation |
| Access Power |
IDT and Access Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDT and Access Power
The main advantage of trading using opposite IDT and Access Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDT position performs unexpectedly, Access Power 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 Access Power will offset losses from the drop in Access Power's long position.The idea behind IDT Corporation and Access Power Co 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.| Access Power vs. BCE Inc | Access Power vs. Axiologix | Access Power vs. Advanced Info Service | Access Power vs. American Nortel Communications |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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