Correlation Between IQIYI and Charter Communications
Can any of the company-specific risk be diversified away by investing in both IQIYI and Charter 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 IQIYI and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iQIYI Inc and Charter Communications, you can compare the effects of market volatilities on IQIYI and Charter 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 IQIYI with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQIYI and Charter Communications.
Diversification Opportunities for IQIYI and Charter Communications
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IQIYI and Charter is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iQIYI Inc and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and IQIYI 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 iQIYI Inc are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of IQIYI i.e., IQIYI and Charter Communications go up and down completely randomly.
Pair Corralation between IQIYI and Charter Communications
Allowing for the 90-day total investment horizon iQIYI Inc is expected to under-perform the Charter Communications. In addition to that, IQIYI is 1.76 times more volatile than Charter Communications. It trades about -0.04 of its total potential returns per unit of risk. Charter Communications is currently generating about 0.09 per unit of volatility. If you would invest 28,085 in Charter Communications on September 1, 2024 and sell it today you would earn a total of 11,612 from holding Charter Communications or generate 41.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iQIYI Inc vs. Charter Communications
Performance |
| Timeline |
| iQIYI Inc |
| Charter Communications |
IQIYI and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQIYI and Charter Communications
The main advantage of trading using opposite IQIYI and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQIYI position performs unexpectedly, Charter 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 Charter Communications will offset losses from the drop in Charter Communications' long position.The idea behind iQIYI Inc and Charter Communications 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.| Charter Communications vs. T Mobile | Charter Communications vs. Verizon Communications | Charter Communications vs. ATT Inc | Charter Communications vs. Liberty Broadband Srs |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |