Correlation Between Iridium Communications and Lagardere
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Lagardere 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 Lagardere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Lagardere SA, you can compare the effects of market volatilities on Iridium Communications and Lagardere 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 Lagardere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Lagardere.
Diversification Opportunities for Iridium Communications and Lagardere
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iridium and Lagardere is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Lagardere SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lagardere SA 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 Lagardere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lagardere SA has no effect on the direction of Iridium Communications i.e., Iridium Communications and Lagardere go up and down completely randomly.
Pair Corralation between Iridium Communications and Lagardere
Given the investment horizon of 90 days Iridium Communications is expected to under-perform the Lagardere. In addition to that, Iridium Communications is 1.56 times more volatile than Lagardere SA. It trades about -0.03 of its total potential returns per unit of risk. Lagardere SA is currently generating about 0.03 per unit of volatility. If you would invest 2,006 in Lagardere SA on September 14, 2024 and sell it today you would earn a total of 194.00 from holding Lagardere SA or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.0% |
| Values | Daily Returns |
Iridium Communications vs. Lagardere SA
Performance |
| Timeline |
| Iridium Communications |
| Lagardere SA |
Iridium Communications and Lagardere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Lagardere
The main advantage of trading using opposite Iridium Communications and Lagardere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Lagardere 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 Lagardere will offset losses from the drop in Lagardere's long position.| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
| Lagardere vs. Stratasys | Lagardere vs. Zoom Video Communications | Lagardere vs. Iridium Communications | Lagardere vs. Eldorado Gold Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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