Correlation Between Innovative Solutions and Thales SA
Can any of the company-specific risk be diversified away by investing in both Innovative Solutions and Thales SA 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 Innovative Solutions and Thales SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Solutions and and Thales SA ADR, you can compare the effects of market volatilities on Innovative Solutions and Thales SA 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 Innovative Solutions with a short position of Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Solutions and Thales SA.
Diversification Opportunities for Innovative Solutions and Thales SA
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Innovative and Thales is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Solutions and and Thales SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA ADR and Innovative Solutions 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 Innovative Solutions and are associated (or correlated) with Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA ADR has no effect on the direction of Innovative Solutions i.e., Innovative Solutions and Thales SA go up and down completely randomly.
Pair Corralation between Innovative Solutions and Thales SA
Given the investment horizon of 90 days Innovative Solutions and is expected to generate 0.82 times more return on investment than Thales SA. However, Innovative Solutions and is 1.23 times less risky than Thales SA. It trades about 0.21 of its potential returns per unit of risk. Thales SA ADR is currently generating about -0.16 per unit of risk. If you would invest 722.00 in Innovative Solutions and on August 27, 2024 and sell it today you would earn a total of 49.00 from holding Innovative Solutions and or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Solutions and vs. Thales SA ADR
Performance |
| Timeline |
| Innovative Solutions and |
| Thales SA ADR |
Innovative Solutions and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Solutions and Thales SA
The main advantage of trading using opposite Innovative Solutions and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Solutions position performs unexpectedly, Thales SA 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 Thales SA will offset losses from the drop in Thales SA's long position.| Innovative Solutions vs. Park Electrochemical | Innovative Solutions vs. VSE Corporation | Innovative Solutions vs. Curtiss Wright | Innovative Solutions vs. Ducommun Incorporated |
| Thales SA vs. Moog Inc | Thales SA vs. BAE Systems PLC | Thales SA vs. Park Electrochemical | Thales SA vs. Triumph Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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