Correlation Between International Consolidated and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Iridium 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 International Consolidated and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Iridium Communications, you can compare the effects of market volatilities on International Consolidated and Iridium 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 International Consolidated with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Iridium Communications.
Diversification Opportunities for International Consolidated and Iridium Communications
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between International and Iridium is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Airlines are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of International Consolidated i.e., International Consolidated and Iridium Communications go up and down completely randomly.
Pair Corralation between International Consolidated and Iridium Communications
Assuming the 90 days horizon International Consolidated is expected to generate 11.46 times less return on investment than Iridium Communications. But when comparing it to its historical volatility, International Consolidated Airlines is 2.04 times less risky than Iridium Communications. It trades about 0.02 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,848 in Iridium Communications on November 29, 2024 and sell it today you would earn a total of 181.00 from holding Iridium Communications or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
International Consolidated Air vs. Iridium Communications
Performance |
| Timeline |
| International Consolidated |
| Iridium Communications |
International Consolidated and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Iridium Communications
The main advantage of trading using opposite International Consolidated and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Iridium 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| International Consolidated vs. COVIVIO HOTELS INH | International Consolidated vs. GEELY AUTOMOBILE | International Consolidated vs. InterContinental Hotels Group | International Consolidated vs. MELIA HOTELS |
| Iridium Communications vs. Hyatt Hotels | Iridium Communications vs. INTERCONT HOTELS | Iridium Communications vs. DETALION GAMES SA | Iridium Communications vs. FRACTAL GAMING 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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