Correlation Between International Consolidated and AECOM TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both International Consolidated and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY, you can compare the effects of market volatilities on International Consolidated and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and AECOM TECHNOLOGY.
Diversification Opportunities for International Consolidated and AECOM TECHNOLOGY
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and AECOM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and AECOM TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM TECHNOLOGY has no effect on the direction of International Consolidated i.e., International Consolidated and AECOM TECHNOLOGY go up and down completely randomly.
Pair Corralation between International Consolidated and AECOM TECHNOLOGY
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.39 times more return on investment than AECOM TECHNOLOGY. However, International Consolidated is 1.39 times more volatile than AECOM TECHNOLOGY. It trades about 0.12 of its potential returns per unit of risk. AECOM TECHNOLOGY is currently generating about 0.11 per unit of risk. If you would invest 161.00 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 133.00 from holding International Consolidated Airlines or generate 82.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.64% |
| Values | Daily Returns |
International Consolidated Air vs. AECOM TECHNOLOGY
Performance |
| Timeline |
| International Consolidated |
| AECOM TECHNOLOGY |
International Consolidated and AECOM TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and AECOM TECHNOLOGY
The main advantage of trading using opposite International Consolidated and AECOM TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, AECOM TECHNOLOGY 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 AECOM TECHNOLOGY will offset losses from the drop in AECOM TECHNOLOGY's long position.| International Consolidated vs. Coeur Mining | International Consolidated vs. Mitsubishi Gas Chemical | International Consolidated vs. Quaker Chemical | International Consolidated vs. Calibre Mining Corp |
| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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