Correlation Between International Consolidated and Computer
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Computer 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 Computer 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 Computer And Technologies, you can compare the effects of market volatilities on International Consolidated and Computer 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Computer.
Diversification Opportunities for International Consolidated and Computer
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Computer is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Computer And Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer And Technologies 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer And Technologies has no effect on the direction of International Consolidated i.e., International Consolidated and Computer go up and down completely randomly.
Pair Corralation between International Consolidated and Computer
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.54 times more return on investment than Computer. However, International Consolidated Airlines is 1.86 times less risky than Computer. It trades about 0.14 of its potential returns per unit of risk. Computer And Technologies is currently generating about 0.05 per unit of risk. If you would invest 172.00 in International Consolidated Airlines on August 28, 2024 and sell it today you would earn a total of 122.00 from holding International Consolidated Airlines or generate 70.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Computer And Technologies
Performance |
| Timeline |
| International Consolidated |
| Computer And Technologies |
International Consolidated and Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Computer
The main advantage of trading using opposite International Consolidated and Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Computer 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 Computer will offset losses from the drop in Computer's long position.The idea behind International Consolidated Airlines and Computer And Technologies 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.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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