Correlation Between International Consolidated and West Red
Can any of the company-specific risk be diversified away by investing in both International Consolidated and West Red 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 International Consolidated and West Red into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Companies and West Red Lake, you can compare the effects of market volatilities on International Consolidated and West Red 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 International Consolidated with a short position of West Red. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and West Red.
Diversification Opportunities for International Consolidated and West Red
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and West is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and West Red Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Red Lake and International Consolidated 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 International Consolidated Companies are associated (or correlated) with West Red. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Red Lake has no effect on the direction of International Consolidated i.e., International Consolidated and West Red go up and down completely randomly.
Pair Corralation between International Consolidated and West Red
Given the investment horizon of 90 days International Consolidated Companies is expected to generate 22.2 times more return on investment than West Red. However, International Consolidated is 22.2 times more volatile than West Red Lake. It trades about 0.2 of its potential returns per unit of risk. West Red Lake is currently generating about -0.02 per unit of risk. If you would invest 3.00 in International Consolidated Companies on October 11, 2024 and sell it today you would earn a total of 1.22 from holding International Consolidated Companies or generate 40.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.56% |
| Values | Daily Returns |
International Consolidated Com vs. West Red Lake
Performance |
| Timeline |
| International Consolidated |
| West Red Lake |
International Consolidated and West Red Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and West Red
The main advantage of trading using opposite International Consolidated and West Red positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, West Red 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 West Red will offset losses from the drop in West Red's long position.| International Consolidated vs. Frontera Group | International Consolidated vs. All American Pet | International Consolidated vs. XCPCNL Business Services | International Consolidated vs. Aramark Holdings |
| West Red vs. Viemed Healthcare | West Red vs. Aquestive Therapeutics | West Red vs. LENSAR Inc | West Red vs. Oatly Group AB |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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