Correlation Between Iridium Communications and Flex

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Flex 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 Iridium Communications and Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Flex, you can compare the effects of market volatilities on Iridium Communications and Flex 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 Iridium Communications with a short position of Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Flex.

Diversification Opportunities for Iridium Communications and Flex

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Iridium and Flex is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex and Iridium Communications 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 Iridium Communications are associated (or correlated) with Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Iridium Communications i.e., Iridium Communications and Flex go up and down completely randomly.

Pair Corralation between Iridium Communications and Flex

Given the investment horizon of 90 days Iridium Communications is expected to generate 84.83 times less return on investment than Flex. But when comparing it to its historical volatility, Iridium Communications is 1.19 times less risky than Flex. It trades about 0.0 of its potential returns per unit of risk. Flex is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,525  in Flex on August 29, 2024 and sell it today you would earn a total of  357.00  from holding Flex or generate 10.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Iridium Communications  vs.  Flex

 Performance 
       Timeline  
Iridium Communications 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Iridium Communications displayed solid returns over the last few months and may actually be approaching a breakup point.
Flex 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Flex are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Flex showed solid returns over the last few months and may actually be approaching a breakup point.

Iridium Communications and Flex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Iridium Communications and Flex

The main advantage of trading using opposite Iridium Communications and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex's long position.
The idea behind Iridium Communications and Flex 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.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

Other Complementary Tools

Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Commodity Directory
Find actively traded commodities issued by global exchanges
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk