Correlation Between International Consolidated and Makita
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Makita 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 Makita 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 Makita, you can compare the effects of market volatilities on International Consolidated and Makita 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 Makita. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Makita.
Diversification Opportunities for International Consolidated and Makita
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Makita is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Makita in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makita 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 Makita. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makita has no effect on the direction of International Consolidated i.e., International Consolidated and Makita go up and down completely randomly.
Pair Corralation between International Consolidated and Makita
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.85 times more return on investment than Makita. However, International Consolidated Airlines is 1.18 times less risky than Makita. It trades about 0.12 of its potential returns per unit of risk. Makita is currently generating about 0.04 per unit of risk. If you would invest 180.00 in International Consolidated Airlines on September 2, 2024 and sell it today you would earn a total of 131.00 from holding International Consolidated Airlines or generate 72.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Makita
Performance |
| Timeline |
| International Consolidated |
| Makita |
International Consolidated and Makita Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Makita
The main advantage of trading using opposite International Consolidated and Makita positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Makita 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 Makita will offset losses from the drop in Makita's long position.| International Consolidated vs. ELECTRONIC ARTS | International Consolidated vs. ON SEMICONDUCTOR | International Consolidated vs. Ultra Clean Holdings | International Consolidated vs. Electronic Arts |
| Makita vs. MTI WIRELESS EDGE | Makita vs. Sumitomo Mitsui Construction | Makita vs. North American Construction | Makita vs. CENTURIA OFFICE REIT |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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