Correlation Between International Consolidated and NEXA RESOURCES
Can any of the company-specific risk be diversified away by investing in both International Consolidated and NEXA RESOURCES 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 NEXA RESOURCES 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 NEXA RESOURCES SA, you can compare the effects of market volatilities on International Consolidated and NEXA RESOURCES 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 NEXA RESOURCES. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and NEXA RESOURCES.
Diversification Opportunities for International Consolidated and NEXA RESOURCES
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and NEXA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and NEXA RESOURCES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXA RESOURCES SA 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 NEXA RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXA RESOURCES SA has no effect on the direction of International Consolidated i.e., International Consolidated and NEXA RESOURCES go up and down completely randomly.
Pair Corralation between International Consolidated and NEXA RESOURCES
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 0.79 times more return on investment than NEXA RESOURCES. However, International Consolidated Airlines is 1.27 times less risky than NEXA RESOURCES. It trades about 0.08 of its potential returns per unit of risk. NEXA RESOURCES SA is currently generating about 0.05 per unit of risk. If you would invest 186.00 in International Consolidated Airlines on September 4, 2024 and sell it today you would earn a total of 125.00 from holding International Consolidated Airlines or generate 67.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. NEXA RESOURCES SA
Performance |
| Timeline |
| International Consolidated |
| NEXA RESOURCES SA |
International Consolidated and NEXA RESOURCES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and NEXA RESOURCES
The main advantage of trading using opposite International Consolidated and NEXA RESOURCES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, NEXA RESOURCES 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 NEXA RESOURCES will offset losses from the drop in NEXA RESOURCES's long position.| International Consolidated vs. Delta Air Lines | International Consolidated vs. AIR CHINA LTD | International Consolidated vs. RYANAIR HLDGS ADR | International Consolidated vs. Southwest Airlines Co |
| NEXA RESOURCES vs. NISSIN FOODS HLDGS | NEXA RESOURCES vs. GUARDANT HEALTH CL | NEXA RESOURCES vs. CVS Health | NEXA RESOURCES vs. SENECA FOODS A |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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